Friday, March 25, 2016

4 types of learning paths

there are 4 types of learning paths for new traders:

1. large seed money (which they bring and use for trading while learning), (and stay) in the market for large enough period of time

= this category is invalid, doesn't happen like this unless u a genious / prodigy

2. large seed money, in the market for small period of time

= obviously, u would have been badly hit and out of the market, more or less (with a wounded ego and torn pocket)

3. small seed money, in the market for small period of time

= u are wasting time by being too shy/nervous/unsure/fearful/playing it safe. u probably don't have a method or the one which is too primitive or a mere-eyewash or not sticking to it. u may still be surviving, returning to (horse) trade occasionally but u don't have a great trading future ahead. u are likely to burn out / pissed off soon. no future in the market for the cowardly / overtly cautious / timid / indecisive traders. u are sure to fall in the gap between the two hills if u don't leap decisively from the first one towards the one ahead with some above-threshold energy/momentum.

"playing for a draw is the surest way to lose" - anatoly karpov

4. small seed money, in the market for long time

= u r destined to be successful. ponder seriously if u still haven't.

since u have been in the trading arena since long despite not betting large amounts (and hence having patience and remaining satisfied with small profits as well as small 'non-fatal' losses "till u have cracked the code"), it is enough hint that u have been through the journey awake and cautious. it is strongly indicative that u were deliberately up to something. serious observation, experimentation and learning is strongly evident.

after the 4th step, u should (rather, u would be, automatically) increasing the seed money and will be in the market practically forever, assured of a place in the "hall of non-famous but totally satisfied very successful traders"

Wednesday, March 23, 2016

observing investor psychology

Q: What was R. N. Elliott looking for in the stock market data in the late 1930s? Did he have a model or theory about price behavior?

Bob Prechter: Elliott had no basic premises, just a mind that was open to the idea that the market might be patterned, which he may have adopted from the then relatively new Dow Theory, which was a set of very few and far more general observations about market behavior. Though the Dow Theorists formed only very rough concepts, they broke ground, tremendous ground, in merely coming up with their observations that market behavior was non-random and tied to investor psychology. That was probably the germ of the idea that kicked off Elliott's research.

Q: What was his procedure?

Bob Prechter: He did what every good researcher must do. First, he recorded the data that reality provided. He looked at the movements on chart paper and wondered, "Can I find forms that occur over and over again?" His answer was, "Yes." He found that they occurred on hourly moves, daily moves, weekly, yearly. He even plotted moves that were decades long and noticed that they were following the same form. Likewise, the specific market did not matter. It could be the stock market, the gold price, interest rates or any other market. Then he organized the data, which was his talent. He began recognizing recurrences in the data, so it became clear that there were indeed repetitive patterns, which he ultimately organized into concepts


Wonderful and Frank opinion above by Bob, the proponent of fractals in trading, about Elliot. What really made me feel good in this para is the sheer honesty.

And we must remember that discoveries of methods and theories and technicals didn't just happen in the last century.newer ones are being created and formed and spotted even today. They may or may not be shared openly.May be closely guarded in circles.steel it is about astronomical money.none shares intelligence of this significance.mass traders are trading with rotten, fossilized, outdated, ineffective technicals IMO. Fresh thinking is so so important. Also, I don't think anyone shared rsi or Elliot or Dow theory or turtle theory details that early and that easily and in that detail even then when those were discovered.

unusable wisdom

"Significance of Trend-line is function of its length, number of times it has been tested (touched) and the angle of ascent of descent."

my view =

but nobody tells you that you won't come to know how much is too much and after how many bluffs the so called range or trend line will break.

so this "wisdom" is un usable and is a mere witchcraft for witch hunting.

I've seen innumerable sheeps getting slaughtered in this maze.

Levels and trendlines are highly subjective.

Everyone has one unique. All those add to the uncertainty nervousness of an already shaky trader.

Stop loss concept has its roots in levels and trend lines, and hence form favourite baits of operators.

the language of candle sticks

"candlesticks give greatest emphasis on the opening and closing prices of trading range."

my view = absolutely. No other technical does that.

I once wanted to do my kind of PhD in candles but by that time I was already committed to RSI and that needed commitment.I had realised that there is much more to candles than just cramming shooting and morning stars etc.

I've seen whole world just doing that only. None has gone beyond the already shared known patterns. None has tried to actually learn the "language" of candles.

I strongly believe that candle sticks are the symbolic videography of any moving data. We have to get so used to candle sticks like the ancient Japanese that we can extrapolate the candle train.

Learning just a dozen or so patterns is like learning just Sayonara's and Asta la Vista's and not the actual language, thus missing the whole message and getting it often wrong and paying the price.

trader's drama

One important quote about trading comes from trading psychology expert Mark Douglas. As he points out, most of us are not as willing to take financial risks as we think:

"Most people like to think of themselves as risk takers, but what they really want is a guaranteed outcome with some momentary suspense to make them feel as if the outcome had been in doubt. The momentary suspense adds the thrill factor necessary to keep our lives from getting too boring."
Worth reading repeatedly till it compels us to change something.......
Sums up amazingly the psychology of most "traders"

bitter truth

everything in the market is predeterminded and cooked in the short to medium time frame. any untoward unforeseen event is reacted to but soon dissolved and nullified if against the original route map of the operators

Tuesday, March 22, 2016

they never say "no"

DM : Even call writers feeling heat now in this rally....

Js : imo operators are 95% writers. they never feel the heat wherever the market goes. they write all strike prices unconditionally. they just charge (much) more premium for the strike prices where they are planning to take the market or expect it to go. they are great shopkeepers. they never say no to write any strike price, any kind of option when someone asks for or is willing to buy. options spread anaylses should be done with this in mind.

the non-believers

no doubt the markets (in this nervous but sharp up rally) may soon fall.....

no doubt their may be macro dark clouds gathering around.....

but the rain may not start for quite a few days. till then what to do?

surrender meekly for the (reversal) trouble which hasn't come as yet and which may still be as far away as next week?

staying on course till the red light is what is the essence of positional/swing trading. otherwise, reversal fear starts the moment the last reversal happened.

we start fearing the longs the moment down rally ends.

distrust is in the blood of every am-trader which needs to be filtered out with the kidneys of guts and sense. otherwise, a trader will only remain spinning and keep bleeding.

if the markets start falling now, i bet many will again start disbelieving it soon and will start "waiting" for the "reversal" again, waiting to "go" long.

the markets are not unbelievable. we are non-believers.

Tuesday, March 15, 2016

power of observation

if you somehow stand through 100 surgeries, I bet you will become some sort of a dependable assistant surgeon yourself whatever be your qualification or background. 

.....such is the power of observation. 

The same is true about trading. 

If you stand through 100 swings or trades you can surely become a decent trader with decent results. 

The trouble is we go through 100s and 1000s of trade surgeries but not as an observer but as a patient with mind under anesthesia.....