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It ain’t called catching, its called fishing


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It ain’t called catching, its called fishing

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  #1 (permalink)
Market Wizard
Kyoto, Japan
 
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The motto for the journal of my new trading venture

I am not an active fisherman, but I do have that "fishing gene" so to speak. I love fishing, when I get the chance.

Anyway, I live in Japan. So, some years back, a friend of mine took me for a day of "tank fishing." This is where you've got a big, square, concrete hole in the ground filled with muddy water and stocked with zillions of "herafuna" carp fish, with orderly ranks fisherman positioned around the edges intently fishing away all day, pretty much motionless, under umbrellas and sitting on little stools.

Most outsiders think the very idea of this is laughable. "That's not really fishing," one might say. And I felt that way too. I used to tease my friend about it before he finally cajoled me into coming along to try it.

"Nah, it's really interesting. It's very technical. Pure fishing. Very pure. It's a numbers game."

Anyway, so we get to the fishing hole, and, as typical for Japan, there are a lot of arcane rules posted everywhere. You have to use a particular kind of pole, a particular kind of bait, etc. etc. It's all very formalized and standardized. Everybody has on a regulation fishing outfit.

Anyway, so my friend had the regulation attire and a lot of very beautiful hand crafted rods and gear. Some of it he had made himself. Like nothing I had ever seen. Obviously he's very freaking serious about fishing.

"I'm not as good as the other guys, but some days I do OK," he says.

So we start fishing, and immediately we are pulling them in like crazy. These are little carp on a hook with no barb, catch and release with little harm to the fish. By noontime the both of us have brought in about 20 or so. Yeehaw, what a blast.

While we are eating lunch some guy comes over and mumbles something to my friend, who then curses and digs into his tackle box and gets out some new gear and different bait, udon noodles. "Goshdarneditall, I didn't read the sign right, we've been bottom fishing when this is a mid-depth fishing place. No wonder we have been catching a lot more than anybody else. I knew there was something wrong."

So then we changed our setup and fished mid-depth for the rest of the day and caught just a few fish, not nearly as many as the other guys. I mean it was pretty clear, you could sit there and see them pulling in fish twice as fast, no three times, four times as fast as we were. Same poles. Same bait. Same fishing spot. Same rules. Some of those guys must have brought in 80 or 100 fish or more.

"Actually," my friend says, "When you attend the monthly competitions at these places, you will see that there is a very definite ranking of who is the best fisherman here. That same guy over there always catches the most fish."

It turned out to be a downright humiliating experience and I never went back.

It kind of reminds me of my earlier forays into trading stocks.

I have thought about that experience a lot over the years. There's a lot more to fishing than just dipping a line in the water, a lot more than just luck, although that is also a factor. To do it well, you really have to go all out.

It strikes me that if you really focus on getting the fishing right, the catching will take care of itself.

This time around, I have decided to really focus on learning how to fish.

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  #3 (permalink)
Legendary Market Wizard
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@suko:

First of all, welcome to futures.io (formerly BMT) !

Very nice analogy and comparison to trading as a serious business.

I wish you best of luck with your trading and I'm looking forward to your Journal !

"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much." - Jim Rohn
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Market Wizard
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Thanks for the warm welcome! Not sure if I shouldn't get right into the nitty gritty of my trades in this journal, rather than talking about fishing. But somehow it seems to be more important to focus the big picture, the behavioral finance aspects of my story.

I do also hope that I have good luck in trading -- at the same time I intend to focus on how to influence the probability of successful trading.

I don't regard myself as a "lucky" type of guy. Very fortunate, yes, in having had all the initial advantages, a brain, good health, family, and so on. But "lucky" as in hitting on the lottery, no. Not that I am the sort of person to ever buy a lottery ticket, I don't think I have ever won anything in a game of chance. I don't gamble, and have never been to the racetrack.

Reminded of a friend, a "fishing crazy" girl who always posts exciting stories and photos of fishing trips and fish caught. So she goes to the racetrack for the first time, and on the very first race she picks the winner and wins $3000. Amazing.

So she immediately takes that $3000 to the fishing gear shop and blows it all on fancy new rods and reels. I'd probably have added that money to my trading capital or given it to my wife to spend on the kids. But come to think of it, maybe I should plan to blow some of the money I am going to make trading just like. To motivate me.

The idea of spending all this time and energy learning to become a good trader just so that I can build up retirement money -- not very exciting motivation. I need a more near term motivation, more concrete.

I think I will take some off the table and blow it on a fancy German car, like the one in your avatar. Maybe an Audi A4 cabriolet?

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Market Wizard
Kyoto, Japan
 
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Self knowledge gained by the age of 54

Good at innovative big picture insight

Good at big project vision

Skilling up is mediocre

Good at following advice and instruction with humility

Capable of radical change in my habits and thinking -- even into my 50's

Unstoppable once I get riding that wave of enthusiasm -- can become highly motivated

I push the limits and boundaries, but I always try to keep my eye on risk/reward

I seek arbitrages everywhere

I seek value over price

I switch hit between angry and cynical and goofy optimism

I don't want what I can't have

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Market Wizard
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Bearing that self knowledge in mind

NO DAY TRADING for me.

I'll do a mix of swing trading and position trading.

At heart though, I really do buy into the Buffett kool-aid, and where I want to be five or ten years down the road is with the bulk of my assets in next-Berkshire-type investments targeting 30+% YOY, and a smaller portion will be committed to swing and position trading in aggressive growth small cap equities and ultra ETFs with trades of a week to three months.

Sectorwise, biotech and technology

25 words: biotech and biopharma small CAP and Ultra ETF swing trader

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Market Wizard
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I'm going to follow the trend in Q4 with focus on small cap biotech names, algo swing trading
with an entry zone, stop, and exit targets. I am going to stay disciplined, paint by the numbers
and keep the journal updated till the end of the year.

I am going to strictly avoid monkey trading like attempting to catch breakout stocks, moving
my stops around, and generally breaking my rules. I am not going to lose money.


If the trend reversal occurs before the end of the year, then I may modify my stops. In the
meantime I an going to figure out a bear market strategy using inverse and volatility ETFs,
since my rules say no short selling, futures or options. I am really looking forward to a bear
market, because that really suits my temperament better than this bull.

At the end of the year I am going to take some money off the table and buy a nice present for someone.

If we get a Lehman type crash, then I am going to start looking for some cheap long term positions in
next-Berks such as Leucadia, Markel and Alleghany or maybe even some AAPL. heh

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Market Wizard
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Latest version of my trading rules, not the newly-added #12, which is sure to lead to success.

Comments, suggestions? What am I leaving out?

Trading Rules version Oct 28, 2003

1. No daytrading
2. All positions have stops at all times
3. No shorting
4. No futures
5. No options
6. No Forex
7. No penny stocks
8. No trading the first 30 minutes of session
10. Trading plan with defined entry, stop and targets
11. Journal with analysis of trade numbers and behavior/psychology
12. No CNBC

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Market Wizard
Kyoto, Japan
 
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This online journal is already having the desired effect in changing my attitudes to trading.

It's not just the fact that it's a journal, but the fact that it's public. I am starting to feel a sense
of accountability, to keep my game tight, at least so that what I post here won't be so darned
embarrassing.

Last night I went through the target numbers on my holdings and, for the first time, tested
my exit strategy. When I woke up this morning I decided to go ahead and set some targets for
exiting my grossly underwater position in USLV (which was a very stupid momo trade that I
haven't wanted to even think about until now, other than "it'll go up, eventually."

The second aspect of this is that now that I feel like somebody is watching, I am going to follow
the plan, rather than just wildly buying on some random bit of news with only a fuzzy reasoning
behind my trade, as in the past ("That looks good.")

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Market Wizard
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I should have added to my self-knowledge list above:

"mediocre-to-poor at vigilance activities"

In this case, a stop was not set, and one of my algo positions, ARWR, did not
stop out as it should have. So now I have a position that is orphaned, outside
the algo parameters, slightly. I went in just now and set a new stop for it.

This is not the first time this has happened. Part of it I could fault on being on a
lousy trading platform that does not allow me to set a stop together with the original
buy order. I need to remedy that. But basically I need to be religious about constantly
double checking on the stops.

I am happy to report though, that another of my small cap bio positions, GERN,
stopped out. That trade is the last one that I made during my newbie chase-a-breakout
era as a trader. That era is now officially over.

A very lousy day in the market as all my positions were down, and I booked a nasty loss
on GERN, but I feel calm about it, because now, for the first time I've got some discipline
and methodology in place. I am not going to keep making that GERN mistake.

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Market Wizard
Kyoto, Japan
 
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My rules updated with risk management:

Trading Rules version Oct 29, 2003

1. Follow trading plan with defined entry, stop and targets
1. No trades more than 10% of portfolio
2. No more than 3% risk on any trade
4. All positions have stops at all times
5. No intraday trading, shorting, futures, options, Forex, penny stocks or margin trading
6. No trading after hours or first 30 minutes of session
7. Published journal with analysis of trade numbers and behavior/psychology
9. Avoid CNBC and Cramer

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Market Wizard
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That's a catchy little Twelve Step slogan for recovering alcoholics. How do I know this, you might ask.

Self-pity is I think one of the greatest weaknesses in my trading psychology. Self-pity in combination with envy.

Right now I am saying to myself that everybody else in this market has been making tons of money and I am the only one bleeding out my ass. And I need to get in there and get a piece of what that guy next door is getting. Get my snout right up to the trough.

This has particularly been driving me crazy because since the start of 2013, as Abenomics began to kick in here in Japan and the NIKKEI doubled in the space of a few months, everybody on my street went out and bought a new German car.

And meanwhile all my money was tied up and I couldn't get into the market until just before it corrected in May. This is exactly what happened to me in 1999. I just get money into the market when all the smart money has already sold.

Self-pity, greed, impatience, lust, envy -- what else is on the list here?

OK, I am going to get my German car. But I am going to do it by patiently mastering these emotions and executing well, not by letting myself get slaughtered crowding up to the trough behind everybody else.

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suko View Post
Self-pity, greed, impatience, lust, envy -- what else is on the list here?

Se7en is still a great film ...

Travel Well
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Market Wizard
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Envy.

I was listening to that famous Charlie Munger speech yesterday
and at some point he says that envy drives the market more than
anything else.

I've got a book here on my desk called "The Seven Deadly Sins of
Investing," by Maury Fertig. Which makes no reference at all to
behavior economics or psychology and just approaches this a
"sins."

Obviously not easy to overcome these "sins," any more than it is
easy to stop being a rule breaker.

But awareness is a good start. To be able to identify "stinking thinking"
is maybe half the battle.

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Market Wizard
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OK, analysis of my GERN trade.

Entered at 4.75 and stopped out 10 days later at 3.90 for a loss of
1.3% of my capital. My account is now down about 4% from the start.
I could probably keep doing stupid trades like this for another year or
so, at the current rate, before I burn through all my capital.

12 months is all I've got. Actually, if I go down another 20% from here
I am going to pull the plug and go back to all cash.

OK, so what was my thinking on GERN?
1. no thinking, just chasing momo reflexively like a dog chasing a car
2. listening to voices on Stocktwits (which I should add to my trading rules,
except I love Stocktwits so much I doubt I could give it up)
3. emotional attachment to the stock (due to the fact that I already made
a little money trading GERN earlier in the month on an earlier breakout)
over a long period of time (I have this idea fossilized in my brain that GERN
is going to be the monster stem cell winnner, when in actuality they are no
longer in stem cells)

Anyway, my key takeaway here is that I have a long-term investor mindset
involving long term narratives (ONVO is another favorite of mine for exactly
the same reason) when I am trying to function as a short term trader.

I need to reaffirm my mission, I am a short-term trader, not a value investor.
I am trying to pretend to myself that I am actually a value investor in short
term trader's clothing, because in my mind trading is associated with stupidity
and losing money. I really think it may even be a moral judgement. Value
investors are wise and moral, traders are foolish and immoral.

I shouldn't care about the long-term narrative.

What do the charts say?

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Market Wizard
Kyoto, Japan
 
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OK, I will admit it, I didn't even look at the GERN chart before executing the trade.
Part of the reason for that is that, again, I have a fossilized negative attitude about
charts and technical analysis. I am deeply suspicious of it, it's all a bunch of voodoo,
right?

But now I am starting to learn about charting. I am going to try to post a chart of
my GERN entry. Let's see if I can do this.



Newbie analysis, I'd say from looking at the SMI that there was good momentum after
the upward triangle crossing on OCT 17, with an entry right about where it crosses the
dotted line.

But I entered on OCT 22 right at the inflection point where weak momentum died, and should
have been short there. So if I had been looking at the SMI no way would I have made that
trade.

OTOH stop was timed right around support, so I ended up getting that $1600 chopped
right out of me. Looking at the final upward triangle on the SMI, I would venture to say that
GERN has bounced off support enough to head upward again. Doesn't look like strong
momentum where the chart ends though.

Where should I have set the stop in the first place, when making the trade?

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Market Wizard
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I hate to be crass, or to wallow in this, but I need to bear in mind
that, in real terms, the $1600 I just lost on that GERN trade is almost
exactly the price of something that a special person covets. This could have
been a possible "catalyst" that would have overcome a layer of "resistance"
and lead to a whole new kind of action.



Maybe I should print this picture out and wear it around on my
forehead all day.

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Market Wizard
Kyoto, Japan
 
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Charlie Munger says the key to understanding everything is to find
where the incentives are.

I'd say the primary incentive that drives civilization forward is:

toys for boys

That's certainly true for me. It's all in the bling bling.

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Market Wizard
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It's not as simple as follow the money. As an abstraction, like the desire to provide for my retirement,
money is not a very good incentive.Heck I don't ever intend to retire. When I cannot work and earn
my keep, then shoot me and use a big gun.

For me, pure, unadulterated heart heart pounding lust is what unlocks the motivation, generates
the wave of enthusiasm that allows me to get the big stuff done. Not some far-away abstraction.
It needs to be immediate, concrete, and realizable.

I am going to need that kind of motivation and enthusiasm to drill deep enough into this trading
thing to find the zone where I can be profitable.

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Market Wizard
Kyoto, Japan
 
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We don't get Gordon Ramsay over here in Japan, so I have just recently discovered his TV shows.

I watch his shows slackjawed, and think about them constantly afterward. I like to think I don't do this for
the scenes of the F-word and all the bollickings people get. What I love is the perfectionism in shows
like Best Restaurant. The attention to detail, to craft, by undisputedly one of the world's masters. The
insight.

He's unapologetic "What we're doing here is not easy, we are aiming for perfection." I think that the
bollickings that he gives to people are probably nothing compared to the bollickings he gives himself
with his own inner voice.

You don't get to the top of anything by being easy on yourself.

In the case of trading, with a 90% failure rate, you don't even survive by being easy on yourself.

I can just hear Gordon, "What the F$CK did you think you were doing with that GERN trade! You
donkey! You ass. That's my money you are pissing away."

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Market Wizard
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With ACAD at 21.78 my small cap biotechs are all stopped out. I guess
I should pat myself on the back that I did not swoop in and remove
the stops, as is my first instinct.

Is this the first sign of discipline in me? Baby steps.

I don't like the looks of this market. It does not look healthy to me, and I am
no longer buying the melt-up-in-a-chase-of-performance argument for the rest of the
year.

So I am going to sit on the sidelines, do a bunch of studying, maybe some paper
trading until we have a clear trend.

I am reluctantly (no, eagerly!) learning how to read charts. I decided to try a
paper trade of FAZ at 25.95. My reasoning for the trade was based on a steep
slope on the SMI breaking over 40, which should indicate momentum. FAZ
then proceeded to fiddle around the rest of the day and then close strong on
good volume.

In retrospect, I think I should have broken my rule on intra-day trading and
closed this out with a tiny profit at the close, because FAZ is pretty volatile and
frequently gaps up and down in the afterhours. We shall see.

I am going to keep practicing these paper trades with an eye on SMI slope.

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Market Wizard
Kyoto, Japan
 
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Another paper trade, KERX at 10.30, up 2.9%. Like ACAD and ONVO, another
one of those biotechs I would like to own forever. Anyway, I am not in love, this
is just a trade, right? T1 is 11.06 and stop is 9.99. Gonna play this one by the book.

In the past couple of days the consciousness settled in on me of "Aw f$ck it, I am
going to go all in and really learn to be a trader." I am going to spend the 1000s of
hours to learn how to do this very hard thing.

And why not? What am I going to do with those 1000s of hours instead? Sit around and
do Facebook? Lemme tell ya, I quit Facebook a while back, and I found it freed up an
extra two hours or so per day to spend on other things. Like learn to trade.

I have a hard time reading books these days, or making much progress with books, but
I can consume Youtube videos, and there are some tremendous trading videos out there.
Right now I am watching the totally awesome Mike McMahon videos from the Online
Trading Academy course. Amazing how much you can learn from watching videos.

Trading School - Class 01 - Introduction, Philosophy and Background - YouTube

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
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Posts: 1,303 since Oct 2013
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Trading Rules version Nov. 2, 2013

0. Follow the rules, lather, rinse, repeat
1. Follow trading plan with defined entry, stop and targets
2. No trades more than 10% of trading capital
3. No more than 3% risk on any trade
4. All positions have stops at all times
5. No ULTRAs, intraday trading, shorting, futures, options, Forex, penny stocks or margin trading
6. No trading after hours or first 30 minutes of session
7. Published journal with analysis of trade numbers and behavior/psychology
9. No CNBC, Bloomberg TV, Cramer

Note that #2 defines the trade size in terms of "trading capital" as I suddenly understand
that trading capital is not the same thing as capital. Most of my capital needs to be invested
in something safe and slow moving. Consequently, I realize that the size of my trades has
been much, much bigger than they should have been. This will mean that I have to slow
my expectations way down, but more importantly, as I pare the size of the trades way down,
the losses will become much smaller. I expect to keep losing. This could go on for a year,
two years, who knows. The smaller the losses, though the more time get to learn this craft

Note that No. 5 adds ULTRAs. Ok, this is more basic risk management. Those ULTRAs are
just too risky for someone like me to be playing with. Look what happened with USLV. I
ended up stuck with a position in USLV that's now way underwater and the only thing I have
now is HOPE. Which word, HOPE, is not in the trader's vocabulary.

So, I have no F$CKING business trading ULTRAs as a newbie trader. No more than I should be
fooling around with VXX/XIV.

That being said, I did a whole bunch of paper trading of FAZ after Lehman, in early 2008, and
the results were spectacular. Great for scalping, but when I went to hold FAZ overnight half
the time it would gap down on me and blow through my stop and I would be sitting on a 5% or
even 10% loss.

So why have I been fooling around with these ULTRAs anyway? I've read all the articles vilifying
UTRAs, I know about daily resets and leverage decay. I know I should't be doing it but still I
want to do it. It's like an alcoholic saying to himself, "Just the one drink."

I kept doing it over and over, and I would ascribe this to greed and arrogance. Arrogance being
the attitude that ULTRAs may be widowmakers for the other guy, but I will somehow skate or
dance my way through to monster profits. In other words, I am somehow immune from the
downside that everybody else experiences.

This is pure MAGIC THINKING.

That's what most of this boils down to is pure MAGIC THINKING.

Anyway, now I have put the ULTRAs on my list of rules, sniff, sniff. I feel like I wanna cry.

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
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Posts: 1,303 since Oct 2013
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Following up from the last post and my magic thinking that the
"rules don't apply to me." Thinking the rules don't apply to you is the
definition of arrogance in my book.

Which is not necessarily a bad thing. A certain amount of arrogance is
a very valuable quality. This applies for maybe all of the seven deadly
sins and other character defects. A little bit of all of these is what makes
you human. A little bit of arrogance keeps you from being sheeple.

How about virtues?

Humility. Humility is not about humiliation. I define it as an honest assessment
of who and what you are, where you are, what your place is in the universe.
Etc. Let's just say "an honest assessment."

In other words, humility is not about wallowing in your failures, such as in the last post
about ULTRAs. It's about giving credit where it's due and taking criticism where it's
due.

I have a tendency to wallow in my failures very negatively -- again that's poor me,
poor me, pour me a drink, and make it a double. This is a self-indulgence. If I want to
indulge in self-abasement, I should just pay a pro domme to abase me for an hour and
be done with it. Not wallow in it all day.

This kind of negativity is the opposite of the mentality I need as a trader. For one thing,
negativity feeds fear, and fear causes you to stampede with the herd. Which is untraderlike.


So, to return to ULTRAs. The biggest success I have had in trading lately has been in BIB, the
biotech 3x bull. I've done three trades thus far, with pretty good execution (for a monkey trader),
and all three of them have made money. I made considerably more money on one trade in BIB
than I lost on any of my losers. So an honest assessment would be that I kinda get
how to trade ULTRAs, I just need to do the work to get to a place where I really know what I
am doing.

I think that if I had decided to specialize in biotech three months ago, and focused all of my
mental energy on just trading BIB I would have done a lot better. I know that's not diversification.
But the thing is, OTOH, diversification is actually one of my main weaknesses. I tend to diversify my efforts,
in a very ADHD type way, I am all over the place. If anything, I should forget about diversification and
focus on one thing like one of Vernor Vinge's proverbial zipheads.

I take a lot of pride in this "diversification of effort," but this pride is perhaps just a consolation
because I have never made a lot of money in my career(s). You make money by being specialized, not by
being a generalist.

As the Japanese proverb says, "Many skills means no skill." From this one saying, which I would
say is one of the deepest Japanese cultural values, you can immediately understand how it is that
the Japanese get such wicked skills and produce such magical things. They focus like there's
no tomorrow.

That's been my career failing, the fact that I always give into ADHD well before I get to the level of
expertise where there's a payoff. And let's be honest, this is a self-indulgence. It's much easier
just to move on when the going gets tough than to stay put in the pain zone and keep fighting to
get to the next level. As Anne-Marie Baiynd says, "I'd rather lick payment than do what I have to do
to trade like this."

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
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Posts: 1,303 since Oct 2013
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Question: is smart money analogous to the early adopter?

I don't know the answer to this, but I suspect there is some
contiguity or congruence between these two.

I can tell you that I am not an early adopter, never have been.
I am sort of a middle of the road adopter. For instance, my first
iPhone was an iPhone4. Although, to be fair, it was my fourth
smartphone.

I got to thinking about this because of the following sentences from
a blog post about the solar boom of 2013:
I wrote that solar stocks will be to 2013 what housing-related
stocks were to 2012 – the best performers coming from a place no one
expects, I was ridiculed or ignored. I did not believe enough in my arguments,
so I was an early seller and I traded the solar names, rather than holding them
for a longer period of time. The lesson – the best performing stocks in any given
year often come from industries that no one expects. Be open-minded. When you
see widely disliked stocks breaking out to new 52-week highs from perfect technical
bases, buy some
7 Market Lessons I Relearned in 2013 | Ivanhoff Capital

My ears pricked up on the phrase "When you see widely disliked stocks breaking out" . I admit
to having been prejudiced against solar, myself. And if you told me in January 2013 that solar would be
the next big thing I would have resisted you. Even though I knew the Japanese alone were rolling out one
nuke's worth of solar per quarter by the start of of 2013. That's a tremendous amount of solar, and it was
obvious there'd been a sea change.

It kind of reminds me of the price of RAM back in the 1990s. Back when a gig of ram was about $1000 dollars.
The mere idea of UNIX on the desktop was risible, because everybody knew that RAM was too expensive
and UNIX needed too much RAM. Etc.

And then one day, like the flipping of a switch, RAM was cheap and the whole world changed. Now we have
64 bits UNIX in the palm.

But it took me quite a while to overcome my skepticism that things had really changed. This is the part
of me that is not an early adopter, is slow to follow the change of trend. I have mental resistance to
the idea of change, to turn on a dime like Soros. To just change my mind.

I wonder if this is more fossilization. My dislike for solar was fossilised in my mind long ago, during some
distant market downturn. Just like my love of GERN was fossilized an eternity ago, when they were a leader
in stem cells.

It's almost as though my negative idea about the possibility of change is fossilized in there by
magic thinking. Like the idea that the Soviet Union could never fall. Back in the 1970's, when I was a
Russian major, and the future in the field looked all bleak and Soviet-forever, it seemed absurdly
optimistic to think that the Soviet Union would collapse, even though the end was evident in a lot of ways
even then. I still couldn't believe it when I saw the Berlin Wall in pieces.

In conclusion, now that I am aware of this, I need to focus on my resistance to change, and keep my
eyes sharp for a change in the trend.

And get my ass out there and buy an iPad Air as soon as they are in the stores!

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
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Posts: 1,303 since Oct 2013
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Bought XERX at 10.30 hit T1 at 11.10 sold off 24% moved stop to BE.
Painting by the numbers.

Next up is GILD, 200 at 69.34. stop at 69.15 EOD, T1 is 71.56.

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
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Since starting to write this journal, my panicky me-to-ism has subsided, and I have
become much calmer and more patient toward the market. I don't feel the urge to
jump in there and chase the action. So, it's working.

My KERX jumped 18% today, heading toward T2, still not there. Patience. GILD was
also up some, working toward T1.

Steady as she goes.

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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I've hit T3 on KERX, and sold 75% off. Now the final 25% I am letting run
and it's up 41%. Painting by the numbers.

Meanwhile GILD stopped out.

So, by this new approach I have three stopped-outs for small losses and one
big winner.

That's kinda how this is supposed to work, right?

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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I've been doing a long march through Norman Hallett's excellent Disciplined Trader videos on Youtube.
These things are a fantastic inspirational resource. I am not going to spend $1000 for his training,
but I will watch his videos. Because I am learning a great deal from them. And because I can just
visualize Norman saying, "Go on, kid, make that stupid trade. I'm waiting right here to take your trade."

In a recent video he says that in this market environment, one of his top three rules is taking only
A or A+ trades. Only the best, most promising setups.

With that in mind, I look at the signals that the black box is giving me. Then I look at the SMI, and, all other
things being equal, if the pick is not showing signs of momentum with a good slope above 20 for the fast SMI,
I am just not going to pull the trigger, regardless of what the black box says.

Now, am I confusing two approaches? Should I just follow the black box, regardless of what it says,
and just let statistics sort out the results?

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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To give credit where credit is due, that's part of humility. When you screw up, you take the blame,
when you nail it, you take it.

Having finished my post-game, chatted with the black box guys, looked at the carnage in biotech
over the past day, all's I can say is, by leaving KERX to run, and deciding not to heed the
black box after looking at the SMI for its various picks, saying "Nah, I'm gonna pass on these"
-- I really nailed it. Beautifully.

Maybe the first indication I have seen that there's hope for me in this biz.

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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Seeing the crazy 70% spike in GERN today, my first impulse is to whinge,
"Why didn't I set the stop on GERN lower, so that I would still have been
in position for this."

Then,

"I can get in on this, let me chase it."

But in my new disciplined trader mode, I just shrug. Rules are rules.

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
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Posts: 1,303 since Oct 2013
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I have hit 500 views with this journal. Thank you, thank you.
Your views are like oxygen.

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
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Posts: 1,303 since Oct 2013
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Golly gee has my perspective on all this changed rapidly in the past week.
It feels like I have poured high octane gasoline into the learning process.
It's almost unbelievable how powerful a catalyst this journaling has turned
out to be.

One thing that has changed is that I have suddenly self-identified as a trader.
I'm a trader now, and I am working on becoming profitable. It could take years
to do it. It's going to take 1000's of hours and a lot of hard work. I'll do it.

There I've said it.

As a consequence of this new perspective, I am now starting to look at the
markets with the eyes of a trader, not those of a retail investor. For instance,
I now realize that I need to go back to watching CNBC -- not to get ideas,
but to see what the retail investors are being programmed and conditioned
to think. To see which way the herd is going to run.


Anyway, so back to GERN. I set my stop according to rules, it stopped out, therefore
it was a "good loss." Simple as that. Let it go and move on.

If I were back in my retail mindset, I would have immediately wanted to jump back in on
GERN on this last breakout, "to recoup my earlier loss." I would have probably bought
GERN precisely at the peak, then got scared and bailed as it dropped, and lost even
more money than I did in the last go-round.

So, now I understand my own thinking pattern better, and knowing that, I am
becoming able to cut through it. I also know that there are a lot of retail investors
out there indulging in that same dysfunctional thinking pattern. I am going to learn to
take their trades. Come to papa!

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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Had a nightmare last night of losing a chunk of my capital. And the scary part of it
was not the fact of loss or the amount of loss, but the stupidity and carelessness of the
it.

This must be a good sign: the message of risk management is penetrating deep into
my unconscious.

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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Posts: 1,303 since Oct 2013
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I had to suck in my breath when I opened my brokerage statement last night. My USLV
underwater position is still sitting there like a dead tree visible in the clear water after the
dam was filled. And all my other positions are stopped out. Just cash and one dead tree.

From my new "enlightened" perspective on risk management, I see that USLV is now
the vast majority of my trading capital. On the other hand, I could also look at it as a very
large hedge against a very bad market event. So, I need to stop framing it as a bad short term
trade and re-frame it as a longer time position trade. Because things are going to get ugly in
the markets again, and when they do I am going to be glad I have this huge PM position.

OTOH I've decided to take about 80% of my total capital and go ahead and position trade it
in a mechanical rotation style from among a handful of ETFs. The strategy involves several
global index, bond and volatility ETFs, which get rotated on a monthly basis with no stops.
The trade for November is EPP, which is Asia ex Japan. Portfolio is 100% concentrated in one
ETF for the month, and may last for from one month to a year or longer. Backtested results for
this strategy over the past decade are really good, and with my time horizon of 15 to 20 years,
this strategy should satisfy my craving for alpha and liberate me mentally from the psychological
pressure I have been feeling to make something happen in the markets. I will be able to relax
and stop worrying that I am missing out.

Newbie trader, sheesh. The only thing I am missing out on is blowing up my account.

Just having my investment capital out of my trading account should relieve some pressure.
From this point forward, once I get back to trading real money in my trading account, I need
to concentrate on taking only the high probability A+ trades with good risk management.

In the meantime, I need to get my mental game in shape, because this is clearly
all about the mental game.

So, dear readers, I regret that you all will have to suffer through a lot more of my touchy feely
psychological posting, rather than fast paced exciting tales of my market victories and subsequent
fevered shopping trips to the Takashimaya Department Store at Nagoya Station to purchase bling bling.

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Market Wizard
Kyoto, Japan
 
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This great pair of charts, JDSU in 2000 vs DDD in 2013, takes me down memory lane to when I blew up my first trading
account. There I admitted it! I frigging blew it up.

I took $30 K in wedding gifts that my diligent and hardworking in-laws saved up over many
years and turned it into $3K in very short order. The most spectacular loss in the whole
thing was JDSU, which I bought at the peak and rode all the way down to about a buck
fitty. A reverse 100 bagger.



Why did I buy the JDSU? Did I even look at the chart? Nope. I bought the narrative --
"optical!!!" And I desperately didn't want to be left out of the action. When I bought it
I figured there must be a bigger fool than me, and all I wanted was "just a little taste."

So, I got my little taste, and here I am, 14 years later, still married, and still wanting
"just a little taste."

Now, as for the JDSU of 2013, DDD, stay tuned for the next post.

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Market Wizard
Kyoto, Japan
 
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Trading psychology: I am gripped by the fear of that I am going to miss the boat.
Every time I look at the Bitcoin chart, for instance, I feel a wave of almost illness.
It's almost a physical reaction. This feverish reaction makes me want to throw the
rules out the window and rush "all in" to chase the momentum.

But instead I am learning to sit on my hands, to calm down and tell myself that the
only boat I am going to miss here is more likely a CIA rendition ship.

Better metaphor is surfers and waves. Mike McMahon talks about how surfing is basically
guys sitting on their boards and yakking, looking over their shoulders at the oncoming
waves, and occasionally taking a good one that comes.

Always more waves coming, there is nothing to miss.

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Birmingham UK
 
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suko View Post
Every time I look at the Bitcoin chart, for instance, I feel a wave of almost illness.

I nearly bought a grand's worth when Prechter first recommended them at 10c. Seriously. I didn't. Smart.

Travel Well
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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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Of course, as the saying goes, it's a lot better to be on the outside
wanting to get in than on the inside wanting to get out.

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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re Bitcoin, I need to print this quote out and hang it above my desk:

"The safest place to look for a new trade is at the end
of the first correction to a new swing"...W.D. Gann

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Market Wizard
Kyoto, Japan
 
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So I executed a 30 minute paper trade in DDD last Friday. It's very much in contrast with my JDSU trade back in '00.

This time around, I am making baby steps toward reading and understanding charts. I found this nice arcing pattern with DDD around 3:00 on the trading day, and saw that the SMI had crossed over right at the red doji candle, so I decided to try a 30 min. short paper trade, exiting 30 minutes before the close. My feeling was that the momentum had run its course and the stock would pull back a little, before some unpredictable action at the close.

Timing was good, and scaled according to my new risk management settings, it turned out to be a nice little $100 dollar trade. Afterward, I felt that this was another indication that I may be able to turn my trading around. In principle I don't want to be day trading like this, but this was a good exercise anyway.


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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
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Posts: 1,303 since Oct 2013
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QUOTD: "The ultimate goal is to be equanimous"

(--one of the speakers on yesterday's TopSide Trader webinar)

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
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Posts: 1,303 since Oct 2013
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I did some research and realized that I can get a huge tax advantage by moving my capital to another jurisdiction. I should have known this before, but I am just getting dialed in here folks! Step by step, brick by brick.

As of this week I am going to start implementing the above-mentioned mechanical monthly rotation strategy with my investment capital. Provided, the vendor that provides the triggers for the monthly rotation target advises using no stops, stating that their backtesting indicates that the use of stops degrades performance. Well, I think I am going to do my own backtesting with various levels of stops, but for the time being I am going to put in a very loose stop of 25%, to cover a Black Swan event.

I should reiterate that, thanks to the journal I kept during this last six months, I was able to go back and backtest looser stops on my trades. Most of my swing trades I had stops set at 10% or so. Backtesting a 25% stop on all those trades showed a huge performance increase. I should be grateful that I made this mistake, since it resulted in losses right off the bat, which kicked my ass, which got me here to futures.io (formerly BMT) for a mental checkup on my trading, instead of continuing to believe myself a young trading genius on the way to blowing up my account again.

The stocks in the rotation position trading strategy are all global index ETFs. The one for this month is EPP, which is Asia ex Japan. However,I am going to modify the vendor's advisory and for the remainder of November I am going with EWJ, as Nikkei is clearly trending now and kicking the ass of the other ETFs in my list: EDV - Vanguard Extended Duration Tsy (25+yr) , EEM - iShares MSCI Emerging Markets, EPP - iShares MSCI Pacific ex-Japan , FEZ - SPDR Euro STOXX 50, ILF - iShares S&P Latin America, MDY - S&P MidCap 400, SHY (cash) - Barclays Low Duration Treasury (2-yr), ZIV - VelocityShares Inverse VIX Medium-Term.

I base this judgement on the fact that the 20 has crossed over the 50 and the 5 has crossed over the 20 and there is good SMI slope on the daily. I'd say resistance is around 16000, the May 2013 peak. I plan to reassess on December 1, and rotate according to instructions (unless EWJ is still trending strongly). Japan is still dropping money out of helicopters, and there will be no talk of tapering until well into the New Year.

Now, as for my trading account, I have decided to lower the amount of trading capital to 3% of total capital. That will leave me just enough funds to have some skin in the game on my swing trades. I am totally convinced that skin in the game is crucial, it makes all the difference as to how much you learn.

In full awareness that I am breaking my rule against Ultras , I went ahead and bought 10 shares of 1568, the TOPIX 2X Bull, at 20,300 yen. T1 is 23,540 (the May 2013 peak) and stop is set at 19,000. I like this 2X ETF better than JPNL, the Direxion 3X Nikkei, because it has pretty good volume. Gameplan-wise, when the 5 crosses back over the 20, and if the SMI indicates an inflection point with a crossover somewhere above 40, I am going to exit this position.

Interestingly enough, the price I got 20,300 is lower than the low for the same day quoted by Reuters, at 20,760. I wonder what the reason for this discrepancy is.

Simplex TOPIX Bullx2 ETF (1568.T) Quote| Reuters.com

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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I am starting to spot trading ideas. You heard about this one first right here, folks.

When I investigated the tax situation in the above post, I made a little discovery through Google -- Wall Street Journal article from September, 2013, which stated that Japanese capital gains taxes are being raised from 10% to 20% as of January 1, 2014.

Japan Braces for Rise in Capital-Gains Tax - WSJ.com

"Please be careful since the supply and demand condition for stocks could deteriorate from the end of November to December," Makoto Hasegawa, director of equity sales at Daiwa Securities (major Japanese broker).

You obviously don't go short Nikkei at this very moment. Look at the charts! But there is plenty of time to have both a massive breakout and then take profits, even at the last minute. And if you just made 50% on your money in the past year, and are facing a massive tax hike, so there is no way you don't take profits.

So, the question is, when does the profit-taking start? And what are the probabilities of the various scenarios:

SCENARIO 1 From the quote above, it seems the smart money is expected to start selling off positions last week November. Which indicates to me that the conventional wisdom is that there will be an orderly retreat, rather than a sudden dash for the exits. But that was the opinion in September, when the market was mired in chop. Does that same logic hold for a market in full breakout? In which case, this breakout has only one more week to run. Is this the most likely?

SCENARIO 2 Looking at the calendar, the last day of Japanese trading should be Dec. 28, and the last week of the year is short anyway as there's a holiday, people are going abroad, cleaning up the accounts, etc. So, psychology-wise, perhaps people would want to ride this breakout then take a profit and get out of the market by the end of the week before Christmas. Then the selloff should start in earnest, at the latest, during the week starting Monday 16. That gives four weeks. Maybe less likely?

SCENARIO 3 Breakout gathers steam and last minute sell-off after Xmas. This is along the lines of a thesis from JC Parets, looking at the charts, which does not factor in this tax-increase reality. Still less likely?

SCENARIO 4 Massive amounts of money subject to taxation abroad overwhelms the loss of demand among Japanese investors and unchecked momentum powers right through into 2014. If you look back at the Nikkei's year-end performance, sometimes momentum will power it through the holidays, despite profit-taking, which always occurs. However, this year is a one-time unprecedented tax event, so I see this as less likely. Improbable but possible.

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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In answer to my own question above, it sounds like the profit-taking started today, literally in the afternoon hours precisely when I was writing that post.

Well, so much for the rally to 18,000.

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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Addendum to self-knowledge list:

"I am a true contrarian indicator"

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Market Wizard
Kyoto, Japan
 
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Aha! There's a specific regulatory reason for heavy selling to be timed for late November:

"In Kinouchi's view, selling could be heavier this time, as late November coincides with when investors who bought stocks on margin just before the Nikkei peaked on May 23 need to close their position after a maximum allowed six-month period."

Japan's higher share-gains tax spurs both worries and shrugs | Reuters

I am getting out of this long trade.

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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I decided to repatriate the bulk of my funds and and am thinking of setting up a limited liability partnership or a trust or something here for tax purposes. So, after the funds arrived, I contacted an acquaintance who's a lawyer to consult me on the best way to set this up. This is a huge step in a positive direction for me.

I was a little suprised that the bank called me up to tell me the funds had cleared. Then they decided to interrogate me about the funds, where was the money from, whose money was it, what was the purpose, etc. I guess this must be the money laundering rules. I think it's an invasion of my privacy. Then I recall that we have no privacy nowadays, that we should just get over it.

Anyway, going forward, this money is going to be safeguarded with strict risk management, and I am going to grow it by by disciplined position trading into something that I can pass on to my children.

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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I decided to bring the DW in to look over my shoulder on these trades, to provide some accountability. Gee, I hate that idea. I hate having her get all in my face with her questions. As an interrogator, she is a guy's worst nightmare.

So, out of FEAR and negativity. I was going to bail on my 1568 TOPIX trade, but she made me stay in the trade, and today it closed near break even, after being down for several days. I would really like to book this one as a win, even by ten dollars.


Later on today, after talking to the lawyer, I finally got up the nerve to call my CPA, another person who gives me the FEAR, about how to deal with the IRS. I have been trying to get up the nerve to have a sit down with the accountant and take the next step with my business to protect me from the IRS -- for years. So now I have an appointment to do some tax planning, and it looks like the CPA is going to push me to incorporate with a joint stock corporation, a K.K. My investment capital will be used to capitalize the corporation, and then will be invested under a corporate trust or something. It will be totally out of reach of my trading risk (and the IRS). The DW is going to be in charge of doing the monthly investment position rotation trades, and I am going to watch over her shoulder.

Actually, there is no entity on earth that gives me as much irrational FEAR as the IRS. Just seeing those initials raises my blood pressure. Even though my books are immaculately maintained by a CPA, and I am totally squeaky clean, still the idea of the taxman coming sets off my deepest money fears. I get into a state of panic just thinking about it. Like the time I first visited a cardiologist.

FEAR of being etherized on the table


A couple of years back I decided to lose weight and start taking care of my health. This led to a desire to do QS with the health indicators. This led one day to me finally getting up the nerve to go in for a cardio exam. This was another area of long-term irrational fears and procrastination. Worried that I am going to have either a heart attack or stroke at any moment. I would lay awake at night worrying about this, for years.

So I get the blood panels back and the results are mostly good. LDL is a little high so we take the testing to the next level, and the next and the next. Meanwhile I drill down into the literature and become dialed in on lipidology, endocrinology, etc. I begin to realize that LDL by itself doesn't mean squat, it's really more about the HDL/TG ratio. My ratio is 1.10.

Next I go in for a calcium scan. This is where they CAT scan your heart and arteries and give you a score on how much plaque is in there. (costs fifty dollars--something everybody over 40 should get done) Result? Zero. Basically, zero heart attack risk. So much for elevated LDL.

Next they do the carotid ultrasound, result nada. Then a cranial MRI, and again there is zero plaque discovered, the brain is clean, pretty much (except for some spots on the 187th slice from that epic acid trip of 1977). Perfectly normal cardiovascular system and a clean heart and brain. Wow!

Finally, I do the 23andyou $99 genetic testing, and I find out that actually I have significantly lower risk of cardiac disease than the general population.

OK, so now I have a health monitoring QS regime set-up and we are going to track all these health indicators. No more fear. It's all gone.

Ok, so what have I been suffering all this FEAR for, all these years? WTF have I been doing?

False
Evidence
Appearing
Real

This journaling is doing the same thing for my money FEAR. Suddenly, after being stuck in procrastination and dread, I am making a breakout.

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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Here is what I am currently reading in my trading curriculum, in rotation:

1. The Trading Book: A Complete Solution to Mastering Technical Systems and Trading Psychology eBook: Anne-Marie Baiynd: Kindle Store
"Keep it simple" is my main takeaway from this introduction to technical analysis. Fibs, Bollinger bands and SMI are about all the tools you need, she says, with an understanding of what constitutes support and resistance.

2. The Little Book of Trading: Trend Following Strategy for Big Winnings (Little Books. Big Profits) eBook: Michael W. Covel: Kindle Store
Another "keep it simple" approach. I am also making a long march through his podcast archive. Some great stuff in there.
The Little Book of Trading: Trend Following Strategy for Big Winnings

3. Confidence Game: How Hedge Fund Manager Bill Ackman Called Wall Street's Bluff (Bloomberg) eBook: Christine S. Richard: Kindle Store
The story of Bill Ackman's epic 7-year long short of MBIA. This has to be one of the greatest trades of all time, and if you consider what he had to do to pull it off -- including possibly the most extensive due diligence ever per performed, legal attacks by NY State Attorney General Elliot Spitzer, the SEC, and Congress, rebellion by staff and investors, the scorn of Wall Street and the hedge fund world, etc. This is not elephant hunting, it is wooly mammoth hunting armed with spears.

4. Risk Intelligence: How to Live with Uncertainty eBook: Dylan Evans: Kindle Store
How do we improve our ability to achieve high probability trades?

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Market Wizard
Kyoto, Japan
 
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Exited my TOPIX Bullx2 ETF (1568.T) trade this morning 20 minutes after the open at 21400 yen. With commissions, I made 1000 yen or $10 on the trade. I am very happy, as this trade went bad from the start.

Not a beautiful trade, but it's points on the board.

Analysis. I give myself a mixed score, maybe a C or C-
Positive:
1. had a trading plan
2. good execution
3. researched and developed a swing trade idea

Negative:
4. broke my rule on no-ULTRAs: greed
5. broke my rule on no trading first 30 minutes: fear and impatience
6. didn't have the setup written down, kept it in my head: laziness

Looking at point #6, when it came to make the exit, I am fumbling around trying to remember the BE number and the target. Ummmmm. It's just like they say, when you get in the middle of the trade, your IQ suddenly drops, and if you don't have the trading plan written down and right in front of you, you are going to fumbling around.

Maybe I should actually have the trading plan printed out.

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
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Posts: 1,303 since Oct 2013
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This summarizes my mood this morning.

Bumper sticker on some bass fisherman's van on the lakeside.


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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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Posts: 1,303 since Oct 2013
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Grateful for:
Healthy, thriving family
Healthy & mostly sane myself
Support from many new friends
And love from many old ones
Loyal clients for many years
Critics and detractors to keep me on my toes
Many high class problems &
Few low class problems

On Money & trading:
Didn't blow up
Early losses had positive takeaway
Found motivation to buckle down
Newfound positive attitude
Determination

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Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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And now a little poem from ee cumings, which should be titled "skin in the game"


plato told

him:he couldn’t
believe it(jesus

told him;he
wouldn’t believe
it)lao

tsze
certainly told
him,and general
(yes

mam)
sherman;
and even
(believe it
or

not)you
told him:i told
him;we told him
(he didn’t believe it,no

sir)it took
a nipponized bit of
the old sixth

avenue
el;in the top of his head:to tell

him

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Portland Oregon, United States
 
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Great poetry! I liked the part about the Sixth Avenue El.

Here is what it looked like before it was torn down and shipped to Japan!

THE 6TH AVENUE EL in pictures - YouTube

"If we don't loosen up some money, this sucker is going down." -GW Bush, 2008
“Lack of proof that something is true does not prove that it is not true - when you want to believe.” -Humpty Dumpty, 2014
“The greatest shortcoming of the human race is our inability to understand the exponential function.”
Prof. Albert Bartlett
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Market Wizard
Kyoto, Japan
 
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Thanks for those pictures. Kinda hard to imagine that, walking down Sixth Ave. today.

People had the idea that the steel had been shipped to Japan, turned into bombs, then dropped on American heads. I guess that must have been a hot topic of the day.

One definition of "blowback."

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Market Wizard
Kyoto, Japan
 
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I don't think it's just the writing of the journal, it's also drilling down deep into this forum and also watching tons of videos on Youtube -- it's having a real effect on my attitude toward the market. A wonderful, calming effect on my agitated mind.

When I came in here a month ago I was in a panicked/frustrated state of mind that this great bull market was happening and that I was missing out on it -- and on top of it blowing up my account in spite of the bull market. Doubly confused and insulted by the irony of it.

By now I have calmed down. I'm not watching the financial news and I don't give a rats ass about where the market goes. It goes up I am going to make money, it goes down I make money. Up and down, buy and sell, buy and sell, buy and sell. That's what we do.

I am going to get back to trading real money when I am good and ready .

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Market Wizard
Kyoto, Japan
 
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When does something stop being a trade and become an "investment"?

This is what I keep asking myself with respect to my USLV position.

Now that I have taken 80% of my funds and locked them up in my investment portfolio, the remainder, all of my trading capital is tied up in USLV. And it looks like I may be holding onto this for a while.

Last week the trade was down by 46%, and it's come back up to 38% down. I got so depressed about it last week that I could not even write in this diary. But I must stick it out. The diary is the key to everything.

Time for a Jesse Livermore quote:

"Patience, Patience, Patience is the key to success not speed, time is a cunning speculator's best friend, if he uses it correctly."

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Market Wizard
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Trading goals for 2014

1. Set up limited partnership for my funds, start my investment program (ETF rotation strategy), set up trust for kids.

2. Read one book or watch one video or webinar per week on trading

3. Maintain this diary with a least one post per week and up my futures.io (formerly BMT) membership to elite.

4. Take at least one active step on changing my money psychology (NLP, etc.)

5. Continue practicing swing trades with live money, only lower trade size to level where losses or gains do not affect me emotionally.

6. Implement futures.io (formerly BMT) trading diary spreadsheet for all my trades.

7. Take one course with some trading guru or program (now leaning toward tradingbook.com)

8. Learn one program like MotiveWave, etc., inside and out

9. Patiently, patiently wait for my USLV long trade to turn profitable, and in the meanwhile take away as much as possible from this very painful experience.

10. Track progress on these goals in OmniFocus, post followup evaluation here at end of 2014.

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Market Wizard
Kyoto, Japan
 
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Usually, when I meet some new expat here in Japan who doesn't know the language at all, I offer my list of five most commony used expressions. It's an 80/20 thing. Master these, and you've got 80% of discourse covered (almost). (the list includes sugoi, omoshiroi, oishii, arigatoh, and ganbaru).

The last one on the list, "ganbaru," is used by everybody all day long. It's used to season speech the way a chef uses salt in the kitchen. Translated various ways, my best parse on it in some situations would be "hang tough".

So that's were I am, going into 2014.

Hanging tough.

This is today's theme because I got my ass majorly kicked in the Forex market yesterday, not by actively trading but by just being positioned in the yen. It's really dispiriting. Even if I don't put on my trading hat I am still implicated in a trade, just by having assets. I guess that's the takeaway. Just because you are not sitting down at the trading station trading tick by tick does not mean you don't have a trade on. It's just a matter of time frame.

Anyway, I am hanging tough. And slowly pulling my head out of my ass.

I have a whole bunch of technical issues that I am working away at. This is made complicated and difficult by the fact that I am here in Japan and everything Japanese is needlessly complicated. That's the way they like it.

Then there are the psychological issues. I have decided to prioritize "moving the needle" on my money psychology.

In my massive trading ebooks collection I discovered i had this little gem of a book:

The Secrets To: Emotion Free Trading
“How To Consistently Act In Your Own Best Interest With Your Off-The-Floor Trading!” By Larry Levin

Just starting to read it. Perhaps I should write a book review for this journal. That will give me the motivation to read it more systematically.

Anyway, the final chapters of the book lay out a practical course of action for changing your trading psychology using Psycho-cybernetics, which, according to Wikipedia, "combines the cognitive behavioral technique of teaching an individual how to regulate self-concept developed by Prescott Lecky with the cybernetics of Norbert Wiener and John von Neumann."

Ok, so I think this is what we know nowadays as the practice of "visualization." Or in Japanese what is called "image training." Athletes do it. It apparently works.

Right off the bat, I can say that a big part of my money psychology involves constant negative visualization of failure and bad outcomes. And this is incorporated into my trading. There is a failure script burned into my head that I am constantly fighting against.

I have got a lot to work on.

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Market Wizard
Kyoto, Japan
 
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Thought for the day:

"Chasing is fueled by FOMO (fear of missing out)."

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Market Wizard
Kyoto, Japan
 
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Don't buy VXX!



from my new fave site:

New Trader

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Market Wizard
Kyoto, Japan
 
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The old, pre-journal me would be thinking that volatility is up and chasing VXX now and getting my ass kicked.

Instead I am sitting in my lawn chair on the sidelines, idly pondering an entry into Vanguard Extended Dur Treas IDX.

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Market Wizard
Kyoto, Japan
 
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"Being afraid to fail is almost a glass ceiling on the success that can be attained."

--Astro Teller

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Market Wizard
Kyoto, Japan
 
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My continuing timeout from trading while I wait for the second coming....
of SLV. Well, let's call it a sabbatical, while I bone up and learn as much
as I can while I wait for this miraculous event.

This week I have been reading the faux autobiography of Jesse Livermore,
"Reminiscences of a Stock Operator." This is a very enjoyable book. I especially
enjoyed the part about the Reading Railroad, since I have been playing Monopoly
with the family of late.

Anyway, Jesse is fishing crazy. Loves fishing. Every winter he goes down to
Florida to go fishing offshore, and every year it seems he just can't help himself
and has to interrupt his vacation to stop in to the broker's office in Palm Beach.

Whereupon he usually gets involved in some misconceived trade that ends up costing
him big, or in any event prematurely terminates his vacation.

My takeaway is, vacations and trading do not mix.

If you're going fishing, then fish.

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  #66 (permalink)
Market Wizard
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Be still my bearish heart!

Seeing these market drops, I want to get in there and buy some 3X inverse ETFs.

I can feel my hear beating faster when I look at the huge red heatmap on Finviz.

Fear Of Missing Out, that's what it is. FOMA

I just sit here and watch the FOMA emotion, taking no action on it. Soon it passes.


Nope, I am going to sit back and swing trade according to Plan. The current status of the plan
is for the trading account, hold my USLV position, in the investment account, all in USD.

So, just ignore the market and keep on fishin'.

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Market Wizard
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This Livermore story is so fascinating. I was originally unwilling to even read about this "failed speculator," because that's not how I see what I am doing here. But then I listened to the Manesh webinar, in which he describes how his trading apprentices have to re-read "Reminiscences" every three months.

Must be something to it.

I think I should do an intensive study of Livermore over the next month or so. Here are the books I've got:
"Reminiscences of a Stock Operator"
"How to Trade in Stocks"
and
"Trade Like Jesse Livermore"

I would like to get copies of
"Jesse Livermore: World's Greatest Stock Trader"
"Jesse Livermore's Methods of Trading in Stocks"

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Market Wizard
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US market closes here just before dawn. So I check my under-water USLV position every morning when I wake up.

Today I was able to wake up to a lovely breakout on silver, and my position is now at 59.46. Still a long way
to go to get back to BE at 84, but at least I feel better about my decision to stubbornly hold fast on this. I have been all the way down the "slope of hope" and now coming out on the other side. This thing kept me awake with bad dreams on Monday night. It's been quite an education.

I am of two minds about where we stand with this PM breakout:

1. Drunken sailor: USLV is headed back to 320, which is where it was a year ago, and I am going to ride the whole position all the way.

2. Disciplined trader: position is too big, need to downsize ASAP, regardless.

Now have an trading plan for this position, with T1 through T4. The last 25% I would like to let run.

3. I don't know if this trading plan is so smart. The more conservative side of me would want to sell 90% of the position when it gets to BE at 84, then let the remaining 10% run. After all, this trade was mistakenly oversized by an order of magnitude in the first place.

I don't know what to do. Maybe the best thing is to stay flexible on this, and if we get back to 84 with clear momentum, them I will stick with the plan. If, on the other hand, this rally peters out and we can't break through the resistance around 84, I will implement Plan B and get out right away.

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Market Wizard
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Back when I was building the house I got stuck on the lighting design right while the electrician was running cable, and was forced to really bear down. I got really dialed-in on the subject of lighting real quick, and I ended up exasperating our architect with 3000 word emails on such subjects as "12V vs 110v halogen bulbs."

The architect responded sarcastically, "What are you gonna do, write a book?"

That's kinda where I feel I am with this diary and my silver ETF position.

I am obsessed with it, and I expect you readers are getting sick of hearing about it. How much can you write about a single trade, anyway?

Speaking of which, I have been slowly working my way through a book on one single trade by Bill Ackman called "Confidence Game". This is one of the Subprime stories that did not make it into Michael Lewis' book "The Big Short."

The reason being that it is such a long and involved story. I had originally become interested in Bill Ackman because of some news article where it said that he had read over 100,000 plus pages of mortgage bond documentation during his due diligence for his MBIA short. I remember thinking when I read that number that it would have to be an exaggeration, that nobody could do that. (And also that this little stunt disproved the "who'd a thunkit" hypothesis about Subprime. Some people did actually do the homework.)

Well, from reading the book, um, no that turns out to be a wrong assumption. Bill Ackman is exactly the kind of animal that does that sort of thing. Striving for total information awareness, to know more about the subject of inquiry than the subject knows about itself. This is hyper-fundamental analysis.

The result of all that research was the conviction to put on the single massive CDS short trade that Ackman was forced to hold resolutely for seven years -- in the face of Elliot Spitzer, the SEC, Barney Frank and his committee, Ackman's hedge fund staff, his investors and ostracism from the whole of Wall Street. Talk about grit, sheesh. Diamond grit.

Well, we know how the story ends. All of the above were dead wrong, and Bill Ackman made almost 2 billy on the single trade.

Absolutely fascinating.

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Market Wizard
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My fascination with Bill Ackman notwithstanding, all of my reading and studying of trading indicates that he's a bad example. The worst kind of example. His style of operation is just so wrong in many ways.

1) It's geared to hitting grand-slam game-winning home runs only

Forget about home runs, I need to focus on hitting singles.

Consistently.

2) I should not even pretend to use his Big Short example as a justification for my USLV trade. There is no comparison. What I did in taking my USLV position was just feed a bucket full of quarters into a flashing slot machine. No conviction to it at all.

From my subsequent reading about it's clear that I violated the cardinal rule of trading by holding onto this loss and riding it all the way down. Nothing worse. About the only error I did not make was to double down.

And as long as I don't sell, it's still risk-on. Which means that I have learned nothing.

Making that admission, I guess it means I am getting psychologically close to capitulation, after five months. Other voices tell me that only by capitulating will I develop further as a trader. Well, that may be so, but silver is now trending up with momentum, half of my loss has been recouped in a week. A few more good sessions and I am going to be back to BE.

So I am going to focus on "patience."

That's my takeaway from the Jesse Livermore books, patience, and this brings me back to Bill Ackman, too. Glacial patience.

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suko View Post

I would like to get copies of
"Jesse Livermore: World's Greatest Stock Trader"
"Jesse Livermore's Methods of Trading in Stocks"

I can help you out with "World's Greatest Stock Trader" as there is a free pdf,.

http://baksyland.com/userfiles/books/jesse%20livermore%20biography.pdfhttp://bak...ivermore%20biography.pdf

enjoy

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Market Wizard
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Thanks for that.

I just read "Trade Like Jesse Livermore." Lot of takeaway from that book, and maybe the main thing is that Jesse was a much more systematic and disciplined trader than he comes off as being in "Reminiscences of a Stock Operator."

I had the impression from Reminiscences that Jesse was mostly winging it, relying on his prodigious memory and natural trading talent to score his successes. But actually he was a hard core journalist, had meticulous trading plans and had a well-worked-out system that he followed with iron discipline.

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I read a book by Livermore many years ago (I forget the name of the book) and he had some of his "technical notes" in an appendix. They meant something to him but there was very little explanation as to how they were used. I remember at the time wondering what this man could do with the Cornucopia of information available today compared to the financial pages of newspapers and a ticker tape.

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Market Wizard
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You'd wonder what Jesse would do with the charts we have today, but apparently charts did become widespread later in his career and he didn't use them. He had some opposition to them.

I think he was the sort of person who would religiously avoid Bloomberg and CNBC, or watch them with the sound turned off. He was very adamant about not polluting his thoughts with the misleading opinions of others, and repeatedly says that he always loses money when he listens to somebody talking his own book or takes a tip.

One important question that I need to research the answer on: pivotal points. Jesse talks about "pivotal points," but what he describes seems to be different from the "pivot points" I see people talking about here. Pivotal points were crucial to his trading technique, and I really want to learn how to identify them.

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Market Wizard
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But at the same time, I think Jesse would fit right into our market system today without missing a beat.

He said there was nothing new under the sun because human nature does not change. Bait fish motivated generation after generation by fear and greed, greed and fear.

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  #76 (permalink)
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well this is true but he seemed to be a slave to to his stock ticker and read several newspapers carefully and those notes I remember were some kind of indicator calculations.

in that time there would be basically 2 charts to work with...open-high-low barcharts and point & figure charts. The Japanese charts we use today did not come until the 1990's and basic indicators were developed in the 60's to 70's.

So he was really developing his own indicators (hence the cryptic notations in that book) and his books talked in generalities IMHO.


Quoting 
One important question that I need to research the answer on: pivotal points. Jesse talks about "pivotal points," but what he describes seems to be different from the "pivot points" I see people talking about here. Pivotal points were crucial to his trading technique, and I really want to learn how to identify them.

yes...I don't think these Pivotal points were mathematics unless they are related to his notes somehow...I think they are more related to his perception of investor sentiment.

Have you seen these appendices I am referring to?? Wish I could remember where I saw them....it was about 3 years ago...it might have been in a library book I took out.

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suko View Post
But at the same time, I think Jesse would fit right into our market system today without missing a beat.

He said there was nothing new under the sun because human nature does not change. Bait fish motivated generation after generation by fear and greed, greed and fear.

He was also dealing with fewer shares than we are today.....he could dominate the market with a million or so shares from what I read and hence manipulate it (I believe he shorted the 1929 crash and was rightly or wrongly considered to have been a cause of it....I think that was sour grapes myself.

But I agree...time has not changed peoples nature much .... I'll bet Prince Machiavelli would still be a great negotiator today

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Market Wizard
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It's pretty apparent to me that manipulation of markets, or the inevitable desire to game the system, is still going on.

Only thing is, nowadays we have Twitter, and a single major player like Carl Icahn can jawbone the stock of even the largest company with tweets.

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Market Wizard
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I continue to ponder the cardinal sin of holding onto my losing trade. It's becoming seared into my consciousness.

I read website after website on trading and every single one says the same thing, "don't hold onto losing trades, it's the road to ruin."

I look at the chart of 1929 and think of all the people who held onto losers all the way down -- and held on for 17 years or more until stocks came back. Except many never did.

And here I am living in Japan, and I think about the Nikkei and 1989, which I watched happen. And there are still a lot of people living right around me holding onto losing NTT positions from 1989. I think my mother in law has one. And real estate that continues to fall to this day, 20-something years later. Heck, my house is sitting on real estate that has continued to fall since we built. I like to affectionately call it my "black hole."

Holding onto a loss this long is like a wasting disease. It saps the courage and confidence and replaces it with despair and depression and negativity. Which I see all around me. Nobody in this country expects real estate prices or stock prices to ever recover to their former levels.

That's probably the worst outcome of holding onto losers, it saps your psychic energy and turns you negative and exceedingly risk averse.

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suko View Post
I continue to ponder the cardinal sin of holding onto my losing trade. It's becoming seared into my consciousness.
......

I look at the chart of 1929 and think of all the people who held onto losers all the way down -- and held on for 17 years or more until stocks came back. Except many never did.

Most of those losers did not have the luxury of holding onto their losing stocks. Prior to 1929, the investors thought "margin" was free money, In some cases they could leverage their account up to 90% of their equity and they leveraged their accounts to the maximum. Then the collapse came and suddenly margin calls came fast and furious...unable settle their margin calls the brokers did what they could to get their money back starting with selling the client's good stocks first...the client could only stand and stare as his accounts were whittled away in hours and nothing to stop the bleeding many committed suicide.

To me selling is the most difficult part of the overall transaction cycle. Taking emotion out of a sale is very important. One must devise a method for exiting a position when It goes against you with as little angst as possible.

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Market Wizard
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The other day I went over to a friend's place and helped him out by doing some welding on a pizza oven he's making.

While I was welding we got into conversation and I mentioned that I aspire to become a trader and am working actively toward this goal.

He chuckled and then told me about how he had given up trading after blowing up in the futures markets, something involving leverage and margin and a loss bigger than his mortgage.

So I asked him if he had properly journaled his trades, had good risk management, proper money management. Yeah, yeah he did all that, he said.

Now, I don't know anything about futures, and my rules make them "off limits" for me, and I am very glad of that. So somebody please explain, how can you have "good risk management" and still over-leverage yourself with futures so that you blow up your account catastrophically? Doesn't make any sense to me.

Second question, if futures are so dangerous, why would somebody such as my friend -- who's a tradesman, not a very experienced trader -- be messing with them? Seems to me you would start off with something safer like trading index ETFs, then work you way up to something like futures and options as you become really consistently profitable.

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  #82 (permalink)
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suko View Post
Now, I don't know anything about futures, and my rules make them "off limits" for me, and I am very glad of that. So somebody please explain, how can you have "good risk management" and still over-leverage yourself with futures so that you blow up your account catastrophically? Doesn't make any sense to me.

Because rules can get forgotten in the blink of an eye once the red mist has descended.... Just like the look but not touch rule with women.


suko View Post
Second question, if futures are so dangerous, why would somebody such as my friend -- who's a tradesman, not a very experienced trader -- be messing with them? Seems to me you would start off with something safer like trading index ETFs, then work you way up to something like futures and options as you become really consistently profitable.

Because really glittery things are much, much, much more addictive than just slightly shiny things. Just like sticking to the devil you know and forgetting the grass is always greener with women.

Eventually we age and learn to do a proper cost/benefit analysis, but by then its often waayyyy too late. Bugger.

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Market Wizard
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Eventually we age and learn to do a proper cost/benefit analysis, but by then its often waayyyy too late. Bugger.

One would like to think that the risk intelligence increases with age, but that doesn't always happen.

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Market Wizard
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I've really been drilling down into trading psychology.

I have found an eight week online course in trading psychology that starts in April. Steve Ward.

I think that it would be money well spent if for no other reason than having the money sunk into tuition would cause me to knuckle down for eight weeks and really focus on my psychology. Even if the contents are worthless, the engagement alone might be worth it for me.

Online Trading Psychology Course | High Performance Global Trading Psychology

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Market Wizard
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I got Steve Ward's book, High Performance Trading...

Amazon.com: High Performance Trading: 35 Practical Strategies and Techniques to Enhance Your Trading Psychology and Performance eBook: Steve Ward: Kindle Store

I am going to read that, and if it resonates with me, I will sign up for the course. Book only costs $9.99.

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Market Wizard
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QOTD: “It’s better to have no position than a dumb one”.

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Great analogy. It draws comparison between fishing and trading.

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Market Wizard
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How I have now come to view the market action: on one side of the fence a small plucky band of professional traders, on the other side a vast and never-ending horde of other market participants.


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... or the few Spartans that slaughtered an entire army.

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Since I came to this site and started doing this journal I have lost any illusion about which side of the fence I am now on.



But at least I know where I stand.

Now, I have to hustle and find a way to get over that fence before either the walkers eat me alive or the traders lobotomize me with a piece of #10 rebar.

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Market Wizard
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I've decided to just go ahead and follow Big Mike's guidance about my trading development, starting with a focus on my trading psychology -- and no more live trading.

I've started the Steve Ward course on Trading Psychology mentioned above. At $750, it's about the first money I have spent on trading education.

Dunno if the course will be worth it intrinsically, but the fact that I have an amount of money that I care about invested in it, skin in the game, should focus my mind on the subject sufficiently for me to get something out of it. Intense focus on this subject for about three months should have some impact on my mentality.

First up, we are reading Kahneman's "Thinking Fast and Slow" along with Ward's "High Performance Trading."

My take from reading the Kahneman book to this point is that we all could take Buffett's advice and lose about 30 points of IQ. Being smart can lead to false confidence and reliance on misleading cognitive biases.

As the Brits say "Too clever by half."

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I've rarely (maybe twice) recommending paying money to a vendor for trading help. I think both cases where with Gary Dayton (trading psychology).

I would urge extreme caution about spending $750 (or any) for help from vendors. In my experience, well over 90% of them are going to hurt more than help.

Mike

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suko View Post
Since I came to this site and started doing this journal I have lost any illusion about which side of the fence I am now on.



But at least I know where I stand.

Now, I have to hustle and find a way to get over that fence before either the walkers eat me alive or the traders lobotomize me with a piece of #10 rebar.

I feel like this on Mondays...

The problem people have with Futures is they don't fully understand what they are buying and selling.

One NQ contract is worth approx $70,100 at the current price. You buy or sell it on a $500 day margin. So you have put up $500 (lower with some brokers) good faith deposit on a $70K instrument. Sounds kinda crazy right? You make 10 1 lot trades in a day and you have handled $700k worth of product. (Be honest as traders we are no different from Merchants or Drug dealers, we just buy and sell different products.)

And to be honest it is a contract that is meaningless, its not like you can take delivery of the NQ, and it isn't a stock or share in a company that comes with dividends or voting rights.

For banks it is a hedging tool for retail traders it is pure speculation.

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I've rarely (maybe twice) recommending paying money to a vendor for trading help. I think both cases where with Gary Dayton (trading psychology).

I would urge extreme caution about spending $750 (or any) for help from vendors. In my experience, well over 90% of them are going to hurt more than help.

Mike

Mike, I am not saying you have literally recommended me paying this or any other vendor.

I am just saying that I am following your advice to focus on psychology.

As I go through this course, I am going to post here what I learn, and when I get finished I will post a review of the vendor.

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  #95 (permalink)
Market Wizard
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tturner86 View Post
I feel like this on Mondays...

The problem people have with Futures is they don't fully understand what they are buying and selling.

One of my first takeaways from the Steve Ward course came from the recommended reading of Kahneman's "Thinking Fast and Slow."

Cognitive laziness.

Especially with smart people. The smarter we are the more likely we are to elide right over the technical details of complex things like futures and options.

That's what I was doing trading 3X ETFs.

The other day I was talking with a friend who's a retail investor, sophisticated-in-his-own-mind. Well, he knows a lot about finance and PhD level knowledge of JGBs. Always patronizes me, but that's okay.

So we're talking about the fact that the JGB interest payments will reach 56% of revenue for 2014 (!!!) and he explains to me again in his patronizing way how he's hedged against the declining yen via the leveraged ETF YCS.

So, I ask him if he's daytrading or swing-trading YCS. No, he answers smugly, he's just holding it.

Yikes, he's as bad as the pre-futures.io (formerly BMT) me!

Very clever guy, must have read the first three grafs of a Seeking Alpha article and decided this was a savvy buy and hold investment. Dude, you gotta read down to the bottom of the article, then go read the prospectus with a very cynical eye.

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  #96 (permalink)
Market Wizard
Kyoto, Japan
 
Experience: Intermediate
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Trading: VXX, VIX, SPY
 
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My take on the vendors in this space.

It's classic "picks n' shovels" in a goldrush.

$1000 for one DVD?

How much for a can of peaches at Al Swearengen's saloon?

I did a little digging the other day and came to the conclusion that the flamboyant stock guru with the orange Lamborghini is making over $10M per year off internet marketing.

Discussing this with a friend who's very into internet marketing in another field I was told, "Oh, that's nothing. So-and-so (big famous internet marketing guru) has made 120M."

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  #97 (permalink)
Hanover, Germany
 
Experience: Beginner
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Who would bother risking his/her money in the markets when Talking about them grants you a risk free 10kk$ ?

Good luck w/ your journey, really like your approach of getting the head straight first! Hopefully it proves straight when put into action again

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  #98 (permalink)
Market Wizard
Kyoto, Japan
 
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With respect to my trading mind, I present exhibit "Lumosity."

I've started doing Lumosity. For several reasons, although I'm not drinking the Koolaid, really.

One of the most interesting things about using Lumosity is that it gives you a sort of objective picture of your state of mind at certain times of day and in certain enviroments. In that sense, it's a sort of QS experiment.

That is, I knew that my mind performed differently at different times of day, etc., but I really had not objective demonstration of how dramatic the differences in performance could be, until I started doing Lumosity.

I guess this sort of thing is what hard-core gamers all know as a matter of course.

In short, sometimes I really suck, and other times I am unbelievably sharp and this is clearly reflected in the scores.

Also, sometimes I am very good at a particular kind of game, and suck at others. And vice versa.

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  #99 (permalink)
London, UK
 
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Suko, how are you measuring that at different times of day? Are your individual scores on each game so dramatically different that it's just clear as day, or do you just play lumosity at the same time everyday and then alter the time after a week?

I've been doing lumosity just before going to bed and my scores are rubbish compared what people are posting on the lumosity thread. But I know my performance is rubbish in the evening and I don't think I'd ever try to trade then.

The other thing I wanted to say was that this Steve Ward course you're doing can't be bad if one of the first things he does is tell you to read "Thinking, fast and slow". Although I guess I could put together a psychology course and put that in lesson 1 as well, so maybe it's not such a great indicator. I'd be interested to see what solutions come out of it to counter-act cognitive laziness.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #100 (permalink)
Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
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Posts: 1,303 since Oct 2013
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Adamus View Post
Suko, how are you measuring that at different times of day? Are your individual scores on each game so dramatically different that it's just clear as day, or do you just play lumosity at the same time everyday and then alter the time after a week?

The other thing I wanted to say was that this Steve Ward course you're doing can't be bad if one of the first things he does is tell you to read "Thinking, fast and slow". Although I guess I could put together a psychology course and put that

I do Lumosity at random times, sort of as a killing-time activity. Or like picking at a scab. It's almost like a refuge. I suppose Steve Ward might suggest using Lumosity focusing games as a tip for improving trading performance during the day when a trader gets off his game. Steve emphasizes concrete measures and exercises for getting back on track.

The range in my scores is greater than 50%. I would have thought that performance would be best early in the morning, since I get up at sunrise. But that's not really the case, I feel. I say "feel" because I do not have the actual time and score data, and furthermore the data is skewed by the fact that my kids and wife commandeer the iPad and run up the top scores. I may have to get the family plan and kick them off my iPad.

The fact that I am quibbling over the word "feel" in terms of stats may be a result of reading Kahneman!

I have a friend who says "When you know better, you do better." That may be the first step dealing with these behavioral finance problems. Realizing that you are doing it, and what you are doing.


Here's the reading list for Steve Ward's course, some of these I had never heard of.

High Performance Trading, Steve Ward
Enhancing Trader Performance, Brett Steenbarger
The Hour Between Dog and Wolf, John Coates
Market Mind Games, Denise Shull
Thinking Fast and Slow, Daniel Kahneman
Behavioural Investing, James Montier
Stress For Success, James Loehr
The Mindful Workplace, Michael Chaskalson

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