market loves to kill giant egos

"Those who learn how to minimize the damage when they are wrong
and who readily own up to the mistakes they make
will do far better over the long haul.
Making mistakes is a part of this game,
but knowing how to handle them is everything.
Likewise, if you attach your ego to your portfolio’s performance
you are destined for failure.
The market absolutely loves to kill those with big giant egos
and who look for the markets as a place to prove how smart they are.
Markets chew and spit out these folks routinely for good reason
and they will continue to do so at every available opportunity."

- Charles Kirk 

secret of day trading success

which of the following trading scenario would you prefer
A. (total 375 points profit in 7 trades) + (total 95 points loss in 8 trades)
B. (280 points profit in 7 trades with no loss)
(*brokerage adjusted profit and loss)
well, on the face of it
both the above scenario look same.
rather, scenario B looks better than scenario A which looks scary!
but, the reality is
that
1. scenario B is just a mirage....it doesn;t happen pratically.
2. scenario A is not only practical but is the best way to be successful in trading.
3. even scenario A doesn't happen
instead scenario C happens as below
C.  (total 175 points profit in 7 trades) + (total 375 points loss in 8 trades)
why?
cutting winning trades early
and cutting losing trades late!
------------------------------------------------------
there is nothing called opportunity without risk.
and where risk is there, there has to be loss.
"cutting loss early, letting profit go on till max possible and trying to increase percentage winner trades"
is the secret of trading success.
------------------------------------------------------

in the above example (scenario A) which is close to reality, you will notice that trade success ratio isless than 50% but the net result is good! this fact speaks volumes. traders are so scared of loss as well as losing trades that they miss the real thing....the net profit!

same thing happens in life. we are so obsessed with the hardships and troubles that we miss the real things.........!!! 

(niftyshots.blogspot.com)

how about winning?

do u play games?

when was the last time u played cricket?
are you a batsman or bowler or alrounder or "jonty" fielder?

and when was the last time u played football?
are you a center forward or anyone-play-anywhere?

did you play well?
did you enjoy playing?

what else do you play?

computer games?

which ones?

and do you play games with people?
at office?
in society?
life in general?

how well do you play?
do you enjoy playing?
do you play consciously or has it become a second nature?

and here is the most important question
do you use indicators to play all of the games i talked above?
charts? software? tips?

well,well,well...

i think you got what i want to say...

games are games are games....
they are to be played with head and hands and legs.....
mental and physical skills are developed......
talent and enjoyment are the bedrock of being a champion in any game
hardwork does the rest.

and by the way
do you play stock trading?

well, you read it right
i said "play" stock trading?

obviously not.
you "do" stock trading.

and that is why
you use software, charts, indicators, etc. etc.

all
except mental and physical skills
without enjoyment!

why not play stock trading?
why not take it as a game?

because money is involved??
well, money is involved in cricket and soccer and other sports as well?
do they make a move as per charts and indicators?

if sony was to introduce a trading game for its playstation
would you play it with charts and indicators?
chances are that you would
given the habits!

but what if you play it like you play other games?
what if you first play a few times understanding
the "controls"
the "levels"
the "rules"
the "curves and diffculties and challenges"?

what if you lose some times
then taste your first success
then win more often
then develop the habit of winning
and then become a professional?

the fact is
that indicators and technicals and charts and bla bla
have taken the fun out of the "game"
the biggest realtime game of all times!

and fun is not just "fun" that has gone
alongwith has gone the sub-conscious "learning"!

millions and millions of "trader" minds have been locked for sub-conscious game-programming.
rather, they have become a game for the big pockets!
they have become a "pokemon" in the games operators are playing!

how about learning the game of trading?
how about playing it?
how about becoming a kid once again?

how about winning?

a view from the 15th floor

imagine you are standing on the 15th floor
of a skyscapper
in the heart of the city.

you are standing in the balcony
with a cup of coffee in you hand
looking at everything below.

you see a few people going from right to left.
and then you see one man going from left to right.
nothing special about it.
then you see 12 more going from right to left.
followed by 27, again going from right to left.
gradually the number increases
groups of 50, 65, 47 move like a swamp of bees
from right to left.
gradually the number starts dropping
29,17,9,7,4,2....

you keep standing there.
perplexed!

you call your friend
whom you are visiting
and whose flat it is
and share what you just saw.

he laughs
and tells you
that the 11am movie show has just started
that gaussian wave of people was nothing
but the flow of audience for the show!

"when the show will be over
you will see all of them returning in the reverse direction
but not in the same increasing-peaking-decreasing fashion
but big rush initially followed by a tail of laggards.
end of a rally is faster than the start of the rally!"
your trader friend tells you.

"o i see!" you say.

next morning you are standing in the gallery again
but at 9am.

suddenly you see a group of over 200 people
running from right to left!

you rush inside
drag your friend out
and ask
"has the movie show advanced?
or is this mad rush for the "dirty picture"?

"no, no! something is wrong
movie show is 2 hours away
and i heard that it is all sold out!"

both of you wait
and then you know the cause
when you hear the sirens of firebrigade trucks
rushing from right to left.

you keep standing for an hour
and notice the fire trucks returning after dousing the fire
followed by the same group of 200 idle onlookers
returning from left to right.

your trader friend smiles
and says

"a panic sell-off or hoax rallies happen and end like that only!"

--

you return home the next day
and resume your trading
without indicators....

just watching the number of people going right to left
and left to right
and the speed and size of the group.

for a change
you stop losing money
and make 3 consistent profitable trades
first time in 2 years!









(niftyshots.blogspot.com)

understanding and avoiding whipsaws - II

how do you coem down from 5th floor to the ground floor?
do you use a slide (like the one in the kids playgrounds)
or do you use stairs?
obviously, stairs.
isn;t it surprising that in stock markets
we have both
- slides, as well as
- stairs
for the prices to come down or go up!
rather there is one more way
- the drop!
but the good news is
that their is no fourth way!
so, in other words
if you can train your eye to spot the three formations in a price chart
and understand when which one is used
you can foresee the presence or absence of whipsaws!
e.g. a slide typically happens when the trend is about to start.
a staircase if used when the trend has started and is continuing and about to continue.
a drop generally, happens when there is a sudden panic sell-off or sudden change in the fundamentals.
these, three are just examples and are neither absolute nor exhaustive!
all i have realised and want to say is
that these three ways are the only ones which i see liberally spread in every chart that i open.
i have realised that if the price is coming down or gong up using a staircase,
then i should expect and anticipate a rangebound consolidation or contraction
after the spike marking the vertical axis of a stair....
we can understand and anticipate the presence or absence of whipsaws
by focusing on the need for the same.

(niftyshots.blogspot.com)

understanding and avoiding whipsaws

every trader fears whipsaws.
so much so that he or she keeps the fear switched on all 24 hours
even after the market hours.

marie curie had said
"nothing is this world is to be feared
but to be understood."

going by this
let's try to understand whipsaw
and cut the fear to a realistic size.

whipsaw doesn't happen all the time.

in actual, 4 types of situations can emerge

1.no whipsaw, big move
= dream outcome a trader dreams of.

2.no whipsaw, small net move
= no-trade day

3.whipsaws, followed by big move
= if you survive the shake-up and still manage to be awake and in the trade in the right

direction, you will forgive the nightmare.

4.whipsaws, almost no net move.
= the nightmare!

so, as you see
you need not fear all the time.
rather, you should try and find ways to anticipate and expect the stage
and avoid the bad setups
and trade the good ones.

how to identify?
after pro-trend big moves, expect whipsaws called consolidation.
at advanced stages of trends, expect markets to rest and whipsaw.
if you can successfully identify and avoid trading urge in the above mentioned conditions
you need not fear whipsaws leading to financial whiplashes
and hence trade with confidence!

(www.niftyshots.blogspot.com)

opponent from a different dimension

90% of the technical traders
lose in the market.

pity
that they take their defeat, failure and loss
itself as an indicator
of some deficiency
in their knowledge and application of indicators and technicals.

result?

they get back to
burning themselves
as well as the midnight oil
to learn more of technicals and indicators.

poor souls!
little do they know
that they are losing the trading battle
less on the technical front
and more on the tactical front.

they are trying to catch the market
with technicals
while the market is dodging them
in another dimension....
tactics,

beating the traders in three ways
- whipsaws
- directional dodge
- unpredictable behaviour

no technicals can make a net
that can catch the liquid fish.

need to catch the flow
from its weakness
....the flow
the irresistible urge
and compulsion to flow
the bad habit to dodge!

(niftyshots.blogspot.com)