Monday, July 21, 2014

Winning Psychology of Defensive Traders

 



Here is the summary of his 10 trading rules :

(1) I trade only when there is something to trade
(2) I never trade without RST ( Reason, Strategy, Targets)
(3) I never trade something I did not research myself
(4) I never buy the high
(5) I never sell the low
(6) I buy on supports
(7) I sell on Resistance
(8) I never trade in No man's Land
(9) I always wait for my setup
(10) I never break any of these rules.

Traders who are familiar with the Turtles Breakout system may have to disagree with Rule No 4 , and rule no 5  because the Turtle buys upon breaking of new high, and sells upon breaking of new low!

Lain padang lain belalang... every sifu has their own methods... and whatever they believe is right, is surely right! After all , we are all trading our belief systems in the market!


The Testosterone Factor


 

















 
Did you know that C8H10H4O2 is caffeine?

 
And that Testesterone  can be changed easily into eostrogen by the fat cells...?

So the fatter the males are  ( waist more than 40 inches ) , the bigger their breast?

It is all due to the T factor !

He recommends that :

(1) Diet : avoid all the usual  bad stuff, caffeine , alcohol, sugar, nicotine
(2) Exercise : espeially pelvic exercises
(3) Sleep : each cycle is 90 minutes , and the end of the 90 min, the 15 min cycle of REM sleep is especially important!

Make sure that your vitality lifespan is equal the physical lifespan!

A History of God


 



 

If you find the Bible too overwhelming, then this book is a great shortcut to find out the events chronologically...

It traces the history of  Judaism ( old Testament ) , Christianity ( New Testament ) and Islam ( in 622  chronologically and condeses the works of mnay writers, philosophers, and gives you the sources to start researching from.

Many Latin and Greek phrases are also cited ...

(1) Credo ut intelligam   : I Believe so that I may understand

A treasure trove... indeed...

Friday, July 4, 2014

SuperTrader

 Super Trader: Make Consistent Profits in Good and Bad Markets: Make Consistent Profits in Good and Bad Markets


When I read Curtis Faith's Way of the Turtle, this was one of the top 5 trading books that I recommend that you must read...

"...The otherComplete books I recommend :
(1) Trading for  A Living ( Dr Alexander Elder )
(2) Trading in the Zone ( Mark Douglas )
(3) SuperTrader ( Dr Van Tharp )
(4) Better Trading ( Daryl Guppy)...."


I reread the book over the week end, and I still think that it is one Complete Trading book because it covers all the necessary aspects, namely :
(1) You ( the Phychology )
(2) Business Plan
(3) Trading System
(4) Position Sizing
(5) Optimal Trading Performance


Dr Van Tharp devoted 1/3 of the book to Knowing Yourself...
... obviously he believes that once you conquer yourself and your weakness, your war will be won eventually.
 The 21 areas that he discussed :
(1) components
(2) Honest Self Appraisal
(3) Trading Type
(4) COMMITMENT
(5) Do what you love
(6)Personal Responsibility
(7) Excuses
(8) Empower
(9) Beliefs
(10) Obstacles
(11) Mindfulness
(12) Inner Interpreter
 (13) Disassociate
(14)Balance Trading/Investing
(15) Stuck State of Mind
(16) Failure
(17) Happy
(18) Vitamins for Soul
(19) Discipline
(20) Removing Stored Change
(21) Enough Self Work?

And I liked the way he defined the market into Up, Down , Sideways by using 5.53% change over 13-week  period : UP if return is above 5.53% over the last 13 weeks
                             DOWN if return is below 5.53% over the last 13 weeks
                             SIDEWAYS if return is in between +/- 5.53%
Volatility is measured by that 2.87% change of ATR over the same 13 weeks.


And the results were : 11.9/ 58.29/ 29.80 ( bear/ sideways / bull )
             41.35% volatile : 10.08/20.31/ 10.96
              58.65%  quiet : 1.8 / 37.98/ 18.84


Monday, June 16, 2014

The Zeroes

Product Details




If you want a glimpse of the hedonism associated with Wall Street BEFORE the 2008 crisis, this is the perfect book.

When money is easy, everybody swims naked...

When the tide goes out, hmm...


I like the motto of Traders Monthly...

SMS : See it, Make It , Spend It!

Also his OPM vs MOM money .... Other People's Money vs My Own Money!

Long term Secrets to Short Term Trading



















When I first picked up this book, I thought Short term trading refers to Intra-day trading using 5 mins or 1 hour charts. But this book is filled with daily charts. So I guess the author's short term is different from my short term.

Since our premise is different , the strategies recommended are for overnight trades vs my preferred intraday, strictly session-only trading. Readers must discern the strategies.... and adjust accordingly to their own preferred style. Eg he mentioned that one needs time to grow the profits, quoting Livermore's quotes of sitting tight during market runs. Good for overnight traders, nightmare for session traders!


However , some POINTS are worth noting :

(1) He goes with a loss in mind. This forces him to place a stop loss order immediately.

( p/s this is very similar to Dr Elder's Loser's Anonymous idea !)

(2) His breakout system makes sense ( after a certain% from the day's open )
( p/s but not all markets behave the same way)

(3) Order within Chaos
(p/s this can easily be identifies using the Zig Zag Indicator )

(4) "There are two primary ways we make money trading ; catching a big price move with a small position or having a large position and catching a small move " - Bill Mehan

(5) Greatest Swing Value ( GSV ) : this is where the Trend changes sentiment

(6) Chart Patterns
    i. SMASH DAY
    ii. HIDDEN SMASH DAY
    iii. SPECIALIST TRAP
    iv. OOPS!

Here are the pictures drawn by me to help explain visually ( hope you like it....;)   ). The charts drawn by the author were bar charts; I prefer candlesticks...

Now , these few pattern are worth looking at.  Maybe some explanation may be enlightening :
SMASH DAY are reversal patterns.
DOWNTREND REVERSAL : the close is lower than previous day's close. The next day, the market closes higher than High of the  New Close. Buy stop upon breakin of the high of the New Close.
UPTREND REVERSAL : the close is higher than than the previous day's high. The next day, the market closes below the Low of the new high day. Stop sell upon breaking of this low.

HIDDEN SMASH DAYS  are Continuation Patterns.
They just serve to attract the unsuspecting public into a "must do " pattern...like a hammer at the bottom of a downtrend. And then "hiddenly" smash through the low of the hammer!. Read the TA books... always look for confirmation in the next day after the hammer before entering long positions!

SPECIALISTS TRAPS are just failed breakouts.

OOPS! are Island reversals.

New traders.... make sure the strategies recommended fit your own style before adopting the ideas suggested by the author.

Thursday, June 12, 2014

Master Your Mind , Design Your Destiny


Standing on the Shoulders of Giant, you will discover that all the giants are follow the same template, but with a little variation along the way to suit individual foibles....

.... my humble observation.

 



If you had read T Harv Eker books, then you will be familiar with the terms and concepts presented in this book by Adam Khoo. Well being a Singaporean, they are very good at "re-packaging" things. After all , Singapore build its wealth on entreport - but raw goods from neighbouring countries , repackage , and then re-export at a higher price. Call it by another name, value-add, rebranding, whatever.

But this does not dilute in anyway the powerful concepts present ( though the same basic materials done in a different way).

What attracted me what the concept of  " acceptance level"...

This brings to mind Chapter 1 in Rich Dad series ( see.. they all share the same basic principles !)

If you accept an $3,000 paycheck and lifestyle, then you will get comfortable with  $3,000. In order to get $20,000 lifestyle, you cannot be doing the same thing at $3,000 level and expect to get paid $20,000.

It is all a matter of choice... if you choose to work at $3,000 level , then you will get $3,000 paycheck. If you want $20,000 then you would need to do the extra work required of $20,000.

His concept of choice has a tinge of Tibeten Buddhism in it... he recommends that  that isntead of saying " I am depressed", say " I choose to feel depressed". This concept of recognising and isolating the feelings of instead of allowing the feeling to overcome oneself has the roots in " mindfulness". This will enable a person to change ( provided he is willing to change in the first place... read Who Moved My Cheese...)... because the agent of change is now within him, instead of using the BLAME OTHERS  as an excuse to pinpoint the responsibility away from oneself!

So, the materials has multi-displinary roots all over ... just like what Robert Hagstrom used to say in the book The Warren Buffett portfolio... it is a latticework of skills that will make you a super investor ( math, psychology  on top of the basic number crunching skills ).

Here are some summary worth remembering :

(1) Patterns of Excellence  : we all have the same hardware ( same brains, and neuron)
                                          we just need the right software to replicate the success

( p/s In my humble opinion, different people have different set of abilities, andweakness. It is better if you can try by trail and error to find the suitable work that suits your aptitude. Eg many may want to be a doctor, but how can an academically smart person be a good doctor if he /she hates the sight and smell of blood? Or course , he can undergo NPL training to get over the fear of blood... but isn't it doing double work? 1st to get rid of the fear, 2nd to get the person to like the job? My teacher used to say, Never waste too much time to go after an attached person... it is double work, 1st to get the girl to like you, then 2nd , to get the girl to dislike the current partner! Phew !)

( Aung Suki said it so well... Singaporeans must learn that money isn't everything... they need to learn how to be happy with what life gives. Of course, that must not stop people from making choices to be rich. Just remember that being rich isn't the only choice available. Being happy is also another viable choice. )


(2) Ultimate Success Formula : Beliefs, Values ---> Goal -----> Strategy ---> Action ---> Feed back
      ( p/s Isn't this similar to T Harv Ekers' : Program( Blueprint ) ---> Think ---> Feel ---> Act---> Results ? )


    Failure : (1) Excuses, Blame, GiveUp
                    (2) Try same thing ( hope for different results?)---> that's Insanity ( byAlbert Einstein!)
                    (3) Feedback and change

  Flexibility : constantly change strategy until you succeed ( Edison's 9,999 ways of how NOT to do it)

(3) Levels of Acceptance : you MUST put yourself in the LINE, and raise yur level of acceptance if you want to achieve something more

(p/s  This is where the concept of choice comes in. You must want something more before you can take action to achieve it . But if you choose something lower and  happy to do so , than so be it. Remember .. your choice , but you cannot run away from the consequence ( read : Steve Covey's 7 Effective Habits) . Do not blame the lack of money on other factors if you are not willing to work hard for it ! )

(4) Responsibility  :  take responsibility for all the choices we make. Don't play victim by blaming others. Playing vitim gives the power to others. Taking responsibility makes the power to change reside within us. Grow up!

(5) Beliefs : beliefs are double edged sword . They can make ( believe you can succeed ) or break you ( believe you cannot succeed ) . The human mind cannot tell the difference between a real experience with an imagined one  . Beliefs are first created from an idea that is reinforced on evidence. To change beliefs, you need to remove the evidences supporting the beliefs and add new evidence.

(6) Emotion Drives Action : We create our own emotions through :
 1. Physiology ( how we stand, our eyes, facial expressions, body pose)
 2.  IR ( Internal Representations ( Beliefs , Values, Action )

Here is my Visual Summary... hope you'd like it....