trader hallucinations

abraham maslow said

"if all you have is a hammer, everything looks like a nail"

in stock market

if continuation triangle is all you've got

every price formation will tend to be forming one.

if rsi is what you've worked hard at

every dot on the paper seems like a failure swing point.

--

how many times does it happen

that we try to force see a price pattern

which is "not there"!

how many times does it happen

that we jump to a conclusion

or decode "what the pattern is trying to tell us"

only to be left looking like a fool!

we see what is not there.

we see what we want to see

we want to see what we know.

we don't want to see what we don't recognize!

--

in the words of livermore

"it is never wise for a speculator to fit his facts to his theories."

instead of fitting the facts to theories

or extracting new theories out of facts

it is better to ask just one thing

whether the undercurrent is

up or down or sideways?

if it is sideways

remain on the sidelines.

otherwise, go with the flow.

--

in the words of livermore

".......determine the speculative line of least resistance.....
prices, like everything else, move along the line of least resistance. they will do whatever comes easiest, therefore they will go up if
there is less resistance to an advance than to a decline; and
vice versa."

a strange way of stock picking - II

"it was an old trading theory of mine

that when a stock crosses 100 or 200 or 300

for the first time

the price does not stop at the even figure

but goes a good deal higher,

so that if you buy it as soon as it crosses the line

it is almost certain to show you a profit.


timid people don't like to buy a

stock at a new high record.

But I had the history of such

movements to guide me."



- reminiscences of a stock operator

when to buy the declining stocks?

"first they sink to the bottom.

then they come up;

but not right away.

they've got to be good and dead a couple of days.

it isn't time for these corpses to rise to the surface.

they are not quite dead yet."


- reminiscences of a stock operator

judgment day

be it the selection of stock

be it the entry point

or the exit point

be it the trade size....

everything related to the trades we take

is dictated by the pressures all around us.

sudden volume surge....

conflicting expert opinions.......

peer pressure........

euphoria.....

panic.....

logics...

etc.

everything

except

our own judgement.

--

result is in front of us.

--

fortunately

here is a sane advise from

'Reminiscences of a Stock Operator'



"a man must believe in himself

and his judgment

if he expects to make a living at this game.

without faith in his own judgment

no man can go very far in this game!"

don't expect big money from trading if

do you want big money from your stock market endeavour?

seems a silly question!

but somehow, i don't think so.

reason?

because, while it seems that every "trader" in the market

"desires" big money

but is perfectly ok with whatever he or she gets

if at all.

desiring something and actually working consciously for it

are two totally different things.

market doesn't owe you any money.

--

in the words of jesse livermore

"it is the big swing that makes
the big money for you."

but big moves are nothing

but a series on medium size moves

punctuated with intermittent corrections

and pauses.

majority traders get-off at these scary points

and hence never get that big move.

--

10 one centimeter long trades

don't give the same result

as 1 ten centimeter long trade

marked with corrections and pauses.

why?

first, 10 one centimeter long trades never happen

because of the 'one centimeter' mindset.

second, a lot happens in-between

when you get-off the train.

either you are unable to catch it again

or do it all at wrong time, at wrong cost.

--

almost all the traders i meet, see, hear, read and know

have all been strugglers since years

because they somehow never got the big swings under their belt.

either they didn't plan to look for big swings

or they simply couldn't ride them due to fear or greed or trading ability.

--

big time trading success

is nothing but

successfully acquiring the ability

to ride

big trend swings.

what's your mindset?

scalping
= pocket money mindset

day trading
= salary mindset

entering trade without checking the trend
= gambler mindset

entering trade anticipating a trend / trend change
= shopkeeper mindset

entering trade after confirming trend and remaining in the trade till first correction
= trader mindset

remaining in the trade till the trend continues despite intermittent correction
= businessman mindset

remaining with the stock till the business keeps growing
= wealth creator mindset

should technical traders be bothered about fundamentals?

yes and no.

yes, because you come to know which tantrum of indicator to react to

and which to ignore.

you know the broader logic and winds.

--

no, because the fundamentals

(including the perception of the fundamental

and the unknown, unrevealed, hidden causes)

are priced in the chart.

any further weighing in of the fundamentals

over and above what the indicators are saying

can cause

overemphasis

and hence

over-reaction.

--

technical traders should trade

purely on the basis of the technicals

read under the light of broader fundamental currents.

fundamental sense will help you identify

which indicator indications to ignore.

--

in the words of

lawrence livingstone

in

Reminiscences of a Stock Operator



"there is always a reason for fluctuations,

but the tape does not concern

itself with the why and wherefore.

It doesn't go into explanations.

I didn't ask the tape why when I was fourteen, and

I don't ask it today, at forty.

The reason for what a certain stock does today

may not be known for two or three days,

or weeks, or months.

But what the dickens does that matter?

Your business with the tape is now -- not tomorrow.

The reason can wait.

But you must act instantly or be left.

Time and again I see this happen.

You'll remember that Hollow Tube went down

three points the other day

while the rest of the market rallied sharply.

That was the fact.

On the following Monday you saw that the directors passed the dividend.

That was the reason.

They knew what they were going to do,

and even if they didn't sell the stock themselves they at least didn't buy it.

There was no inside buying;

no reason why it should not break. "