Archive for the ‘Journals’ Category
Notes on Philosophy
- My Ambassador’s Badge at Philosophers Notes:
“Peace is costly but it is worth the expense.” ~ 
Please go to the following links to download freebies.
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http://philosophersnotes.com/freebies/awang
- Rubber Bands and Your Ideals
- The Road Less Traveled
- Put Your Socks On.
- Your Hair on Fire?
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Events for February/March 09
TV appearance for Ray Barros :
Mon Feb 9 @ 7.30am at BBC Spore studio
Anchor: Rico Hizon
MONEY SHOW HK ON MAR 17 – 19 2009 @ The Grand Hyatt HK
SPEAKERS:
http://www.moneyshow.com/hkms/speakers.asp
 STEVE FORBESChairman, CEO, and Editor-in-Chief Forbes |
 Jim RogersInvestor and Author |
 Victor ChuChairman & CEO First Eastern Investment Group |
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 MARC FABERPublisher, The Gloom Boom & Doom Report |
 JOHN BOLLINGERAuthor, Bollinger on Bollinger Bands |
 emily chanAnchor, CNBC |
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 LORRAINE TANAsian Research DirectorStandard & Poor’s |
 SAM STOVALLChief Investment Strategist Standard & Poor’s |
 Joseph BattipagliaMarket Strategist-Private Client Group Stifel Nicolaus |
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 Yonghao PuChief Regional Economist UBS Wealth Management and Business Banking |
 Ray barrosAuthor The Nature of Trends |
 Linda RaschkePresident, LBRGroup Principal Trader, Granat Fund |
 Simon tingCEO, Tanrich Futures Limited |
 Robert McTeerFormer President & CEO Dallas Federal Reserve Bank |
 Peter steinHong Kong Bureau Chief Wall Street Journal Asia |
 tim murphyFounder IPGlobal Limited |
 JOHN PERSONAuthor, The Complete Guide to Technical Analysis for the Futures Markets |
 leon goldfeldChief Investment Officer HSBC |
Speaker Biography & Schedule LEON GOLDFELD
Chief Investment Strategist, HSBC
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The Elliott Wave Financial Forecast recorded an 18.5% gain over the past 12 months, and is the second-best performer over the past year, all while taking on less risk than the broad market.
And right now, they’re making a special offer available to www.awanginvest.com or IDkit readers that coincides with today’s release of the latest issue of the Financial Forecast’s sister publication, Robert Prechter’s Elliott Wave Theorist.
In his brand-new Elliott Wave Theorist, Robert Prechter says that once you read the evidence he presents, “you will know whether or not the market is at a bottom.” This new January 2009 Theorist is more than a must-read issue; it’s one of the most profound and important of Prechter’s career. Of course, as with all the offers at Elliott Wave, they have a 100% satisfaction guarantee to go along with your order, you can read all the details here. |
EXERCISE V PLAY in developing performance
Elkonon Goldberg notes in his The Executive Brain text that attention, planning, reasoning are functions of the brain’s frontal cortex. His research suggests that by utilizing brain functions, we exercise brain regions and strengthen their functions like going to a gym builds our muscles and endurance.
Over time, we can build our brain’s capacity for intention by exercising the frontal cortex functions. We can look at lifting weights as the best way to build our strength, engaging in sustained, directed efforts to cultivate our intentional capacities.
Become Your Own Trading Coach, Dr Brett Steenbarger’s new weblog, also the title of his forthcoming book of same name, will be instructive to traders to self-coach in all aspects of becoming a good trader.
In Enhancing Trader Performance , Dr Brett describes the dynamic of talents leads to interests leads to immersion in skill building leads to competence leads to further flow and the eventful development of elite performance.
“It is the interplay between the flow state and the development of intentionality that creates accelerated learning curves: without flow, talents have no place to go; they never evolve into elite skills.”
Without the flow, there is no motivation to sustain efforts leading traders to sabotage themselves with impulsive trades.
The first step to performance development is practice but before this step, there should be play. Elite performers never stop playing, for example, concert pianists improvise as well as practise on the piano keyboard for hours daily.
As newbies, we should paper trade first in parallel to live trading with entry, stop and profit target.
By playing with paper trading, we can discover niches that will build mental muscles to lead to higher performance.
On the same note, it is also vital that we ‘play’ in the gym for an hour or less, say three times a week, preferably before the start of our working day, to exercise our brain and build our muscles to keep mind and body fit to take the stress out of trading. Or we will end up with Distress.
Stress can facilitate performance but Distress can impair one’s ability to focus and correct an action.
We need to play and exercise to be in top form, in whatever we set out to achieve.
I await with great anticipation to read Dr Brett’s new book when out next year, to become my own coach and student.
Happy Thanksgiving to my American friends!
Happy Thanksgiving again
Prestige -Thanksgiving revisted
http://awanginvest.com/wp-content/uploads/2008/04/thanksgiving-celebration.pdf
A thanksgiving fire-drill – John Mauldin:
https://mail.google.com/mail/?zx=1oxlrbe03yf9w&shva=1#inbox/11ddc92f2661a955
Behavioral Finance -Pruden
Follow up on (April 6, 2008 @ Idkit)
Another perspective from:
Behavioral Finance – Prof Shlomo of UCLA
Hank Pruden on “Behavioral Finance” and Technical Analysis
by Jim Wyckoff
Hank Pruden’s theory of “Behavioral Finance” proposes that human flaws are consistent, measurable and predictable, and being aware of and utilizing this phenomenon can benefit a trader.
“For the better part of 30 years, the discipline of finance has been under the thrall of the random walk\cum efficient market hypothesis. Yet enough anomalies piled up in recent years to crack the dominance of the random walk. As a consequence, the popular press has been reporting the market behavior,” said Pruden. One of these new methods discussed is “behavioral finance.”
Pruden is a professor in the School of Business at Golden Gate University in San Francisco. He was a featured speaker at the 20th annual Telerate Seminars Technical Analysis Group Conference (TAG 20).
Behavioral finance is “the use of psychology, sociology and other behavioral theories to explain and predict financial markets. Behavioral finance describes the behavior of investors and money managers and their interaction in companies and securities markets. It recognizes the roles of varying attitudes toward risk-framing of information, cognitive errors, lack of self-control, regret in financial decision-making and the influence of mass or herd psychology,” said Pruden.
Predictable human behavior can and does impact markets, said Pruden. One example is the “crowd psychology” or “bandwagon” theory. For example, if a market is coming up from a basing area on the charts, “smart money” is responsible for the majority of the initial buying. “As people jump on board, we see the bandwagon effect, and that bandwagon pushes prices up. Volume tends to surge at its peak, certainly on the buy side, during the mark-up phase in the middle. Later on, toward the end of the trend, smart money is not doing the buying; somebody else is. The smart money is doing the selling. The market tops by curving over, or sometimes with a spike top. So, we can see express that in price and we can see under it in volume,” said Pruden.
Regarding the type of trading approach to the bandwagon effect, Pruden said, “We align our indicators to show a distribution pattern or a breaking of trendlines, and we should see a post-volume peak. Volume will typically peak before a big change in sentiment.”
Pruden said he puts time, price and sentiment together to come up with a composite to look at all those parameters at once. This composite would help in any trading decision, he said.
In the four major elements of technical analysis—price, volume, time and sentiment— recognizing and factoring in human behavior is certainly a major portion of the sentiment element, said Pruden.
At Golden Gate University, Pruden developed and teaches accredited courses in technical market analysis.
My journal-keeping
WHY do we as traders need to keep a journal?
With a balance of self-discipline and cognitive flexibility, rules can be applied to enhance trading performance.
This self-discipline includes:
1. Start every day fresh. Think of a mantra : “There’s a bullet coming toward my head today, and I’ve got to figure out where it’s coming from and how to stop it.” This mantra can bring down overconfidence, instill humility and encourage preparedness.
2. Invest an amount of money that is comfortable. If we invest on money that is on the line, or what we stand to gain, then judgment will be impaired. When emotions become overwhelming, ‘throw a maiden in the volcano.‘
3. Plan and Invest :Linda Bradford Raschke counsels, “Know what you are going to do BEFORE the market opens.” Mark Cook remarks: “Planning is the objective part of trading. Start with the worst case scenario and work from there.”
4. Learn from past mistakes. Keep a psychological journal.
Journaling is the most commonly prescribed method as trading psychologist Dr Brett Steenbarger points out. Keeping a decision journal is an important part of a trader’s daily training and practice. While athletes exercise their bodies and hone their physical techniques, investors need to be aware of defects and advantages in their mental game. If athletes must spend hundreds of hours in practice and training for each hour of actual competition, journaling process may seem excessive and time consuming, but this is the price traders have to pay.
Some Questions for template of Psychological Decision Journal:
1. Pre-decision :What are my qualitative reasons for investing in this security? What is my level of confidence in this decision? What is my advantage? What objective changes in conditions will change my decision? What are my specific criteria for a buy/sell?
2. Post-decision : How am I feeling about the pre-outcome?
3. Post-outcome : Was it accurate ? Any flaws in the decision process? Can I find patterns to compare with my previous decisions? Did I deviate from my investment philosophy? What were the most successful aspects of this decision.
CONCLUSION
This psychological decision journal template should be used in conjunction with a spreadsheet journal with quantifiable statistics. They include style of trading, eg swing trade, intraday trade, long-term position etc. Also stop boundaries for both time and price and objectives including expected risk/reward probabilities, number of losing and winning trades, to find evidence of loss aversion.
Biases towards periods of favorable sentiment can be detected on both templates BUT by dragging this out into the light of day, one can then try to solve the problem/s to become a better trader.
ANA aka IDKIT
Do nothing if……….
NOT UP TO IT, SIMPLE AS THAT!
Cross ref from www.tradingsuccess.com/blog/
Trade like a pro even though a novice!
Some trading tips:
Traders who put on trades to get a rush and a feeling of euphoria act like compulsive gamblers. Impulsive traders have absolutely no discipline. Obviously, trading is no place for the trader with a need for shear excitement and risk.
A social gambling mindset can quickly wipe out your trading account. If you are serious about trading professionally, changing this mindset is vital. You may find trading enjoyable, but the main objective of professional trading is making profits. Not only does that mean building winning trading skills, but careful risk management, discipline, emotion control, and executing trading strategies in a peak performance mental state.
Do you trade like a professional? It is vital to examine your risk-to-reward ratio before making a trade. It’s also essential to trade with money you can afford to lose, and to limit the amount of risk you take on each trade. Make sure you can survive a drawdown, and avoid wasting your precious capital on low probability setups.
Don’t put on trades just to get a rush of excitement. Make sure you have a detailed trading plan and trade the plan. Seek out high probability trade setups, and stand aside until you find a setup where you can win.
In gambler’s parlance, “you’ve got to know when to fold ‘em.” It’s impossible to make money without risking it, but there is a huge difference between reasonable risk and recklessness. Winning traders know the difference and don’t take unnecessary chances.
April 17th, 2008 at 10:42 pm Hi Ana
Welcome to my world of fatigue. As a pilot, I am perpetually changing time zones, and working odd hours. Sometimes it works in well with trading, other times it conflicts.
There is always the nagging feeling of missing out, but the constant knowedge that there will be other trades.
Managing sleep, food intake, exercise and hydration play a larger part of keeping up to speed than most people realise. Giving yourself an honest rating on each level before commiting to a trading day, can save you some anguish later. Sometimes the hardest decision is to decide to do nothing.
In the clear light of day, when you have had a good night sleep, it can be very easy to say ‘why didn’t I see that coming’.
Stuart
April 17th, 2008 at 11:31 pm Arigato, Stuart-san!
You are absolutely correct: doing nothing is the hardest thing to do.
What you said overall will be added to my Psychological Journal.
Here is more from Ruth Barrons Roosevelt:
You may also want to change your self-talk. In her book, Overcoming the 7 Deadly Sins of Trading, Ruth Barrons Roosevelt lists some supportive beliefs that may help control the need for extreme perfectionism: “I do my best and my best is enough. Trading is an imperfect art and science. The future is unknowable, so I don’t have to accurately predict it. I can forgive myself and still improve.”
Being a Virgoan, this is not easy for me!
BTW do visit my IDkit at awanginvest.com
Bon voyage