Info!! Correcting 2 Non Bad Trading Psychology Mistakes

Too often, traders receive got inwards 1 slice of information later another, reading emails, scanning charts, reviewing interrogation pieces, tracking news, in addition to talking with other traders, in addition to never larn to the betoken where the information is transformed into knowledge.  Someone trading the stock of a fellowship may compile all sorts of statistics in addition to tidings items virtually that company, simply those inwards themselves don't ensure a cognition of the company's competitive advantages in addition to disadvantages or its increment potential.  If somebody gathered pieces of information virtually our lives, would they genuinely sympathize us?

We oft listen that the pump of trading psychology is champaign of written report in addition to the command of emotions.  Other times, nosotros listen that openness to in addition to awareness of our emotions is crucial to enlightened determination making.  Both perspectives receive got merit, yet both brand the fault of assuming that trading psychology is basically virtually what in addition to how nosotros feel.  

Not so.

Every flake every bit of import to our trading every bit our emotional psychology is our cognitive psychology:  how nosotros procedure information in addition to plow it into knowledge.  Indeed, I would debate that, every bit nosotros displace from outset traders to experienced ones, emotion becomes less of a fundamental focus for trading in addition to information processing becomes to a greater extent than critical.  Lo in addition to Repin, for example, found that traders responded to heightened marketplace position volatility with emotion, with inexperienced traders far to a greater extent than reactive than experienced ones.  Experienced, successful traders may or may non wrestle with emotional responses to a marketplace position scenario, simply they volition ever live on actively involved inwards processing that scenario in addition to searching for opportunity.

Two cognitive psychology mistakes are mutual with traders:

1)  Not making the fourth dimension to get together information into knowledge - Key to cognition is finding meaningful patterns inwards information in addition to placing those patterns into a framework for understanding.  In my trading, I runway statistics ranging from volume, breadth, sentiment, in addition to buying/selling pressure, simply it's the integration of the information that contributes to understanding.  One cast of integration is inwards the cast of a mathematical model.  Another cast is a conceptual framework that is grounded inwards the concept of marketplace position cycles.  If I larn in addition to then caught upwards next the information that I don't engage inwards integration, I volition neglect to perceive valid trading opportunity.  Equally problematic, I volition tend to human activity on private pieces of information that catch my attending without placing that information into proper context.

2)  Not playing to our information processing strengths when nosotros generate trading ideas - Each of us is quite unlike inwards how nosotros brand sense of the world.  Some of us are quite mathematical in addition to analytical, assembling views from the reason up.  Others are conceptual in addition to qualitative, looking for wide patterns to derive a top-down consider of the world.  My most native cast of information processing is writing.  Quite literally, writing is my agency of thinking aloud in addition to generating an internal dialogue that places information into perspective.  Other traders arrive at the same affair past times reading in addition to taking notes; yet others past times engaging inwards multiple conversations.  Far also often, traders neglect to plow over their potential because they're non accessing their cognitive potentials.  They are making sense of markets inwards somebody else's style, non their own.

I've lately begun an experiment inwards which I engage inwards rattling extended journaling, writing out my assessment of the most recent day's marketplace position in addition to where it fits into the broader movie of marketplace position cycles, simply also writing out every unmarried merchandise that I place, why I placed it, what worked in addition to didn't work, in addition to what I receive got done good or could receive got done differently.  The depth of the journaling is far unlike from the typical terminate of twenty-four hr catamenia notes on trading in addition to markets.  In practice, I proceed writing in addition to writing until I larn to the betoken where cognition results from the information.

It's early on days, simply the method in addition to then far has been helpful.  One unintended consequence:  I honor myself feeling to a greater extent than confidence inwards trades when I've processed the chance inwards greater depth, inwards ways that are most productive for my sense-making.

Further Reading:  The Two Brains of Trading
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Info!! Trading Psychology: The Best Of 2009 - Book Four

With this posting, nosotros twine upwardly the catalog of best trading psychology posts from this weblog during 2009. Here is where you lot tin abide by the best of the 1st quarter, 2nd quarter, as well as 3rd quarter. You tin every bit good abide by the best posts from 2006, 2007, as well as 2008, every bit good every bit a collection of posts on trading indicators as well as methods.

* A Cognitive Strategy for Overcoming Frustration; come across every bit good a Solution-Focused Strategy for Dealing alongside Frustration;

* Finding Freedom inwards Commitment

* Being Right vs. Being Profitable

* Life Problems that Become Trading Problems

* Living for Trading vs. Trading for a Living

* The Power of Market Metaphors

* Ten Qualities of Successful Traders

* Avoiding Confirmation Bias inwards Trading

* How to Avoid Going on Tilt

* The Psychology of Position Sizing

* The Best Projective Test of All; come across every bit good Life every bit a Projective Test

* Why Traders Don't Make More Money

* Trading From a Position of Power

* Reducing Bias inwards Trading

* Preparing to Win

* The Value of Previewing as well as Reviewing Markets

* Discovering Your Trading Patterns

* Managing Your Psychological Energy

* Preparation as well as the Perception of Time

* Setting Trading Goals

* A Theory of Romantic Relationships

* Learning to Shift Emotional Gears

* Well-Being as well as Frustration; come across every bit good Goal Setting as well as Frustration

* Novelty as well as Psychological Change

* The Value of Trading every bit a Performance Activity

* Why Traders Keep Losing Money

* What Moves Markets; come across every bit good More Perspectives on What Moves Markets

* Biofeedback Applications for Traders

* Visualization Practices for Traders

* The Psychology of Return Paths

* Hard Lessons for Traders

* Why Quiet Markets Reveal Good Traders

* Turning Human Performance Into a Lifestyle

* Market Awareness as well as Self Awareness

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Info!! Best Practices Inwards Trading: Edifice A Learning Network Via Social Media

One of the greatest psychological challenges of trading is a cognitive, non an emotional, one.  It is the challenge of bandwidth:  our limitations inward processing large amounts of data at whatever given time.  Many portfolio managers I've worked alongside convey developed ways of expanding their bandwidth, including edifice out teams to assist alongside inquiry in addition to execution; connecting alongside savvy peers to hash out marketplace ideas; in addition to staying inward impact alongside colleagues on the trading floor.  Turning trading into a squad sport increases the break of eyes in addition to ears on markets in addition to is valuable inward spotting emerging trading ideas.  How many times convey I observed traders in addition to hence focused on their item trades that they missy what is happening inward the broader market?  Tunnel vision is a cracking agency to acquire blindsided inward markets.

What social media is accomplishing is a leveling of the bandwidth playing champaign for private traders.  Most independent traders create non convey a trading flooring to plow to for marketplace coloring in addition to cannot afford to construct out teams of analysts.  Through social media, however, they tin plow their trading into a virtual squad sport.  Cultivating a focused network of insightful peers adds to the eyes in addition to ears on markets in addition to sparks thinking almost fresh sources of opportunity.

This is why edifice a social learning network is a best practise inward trading.  This is a network of peer traders who value your input in addition to furnish yous alongside valuable observations in addition to insights into markets.  The fundamental to creating an effective social learning network is selectivity.  H5N1 cracking bargain of the commentary via tweets, weblog posts, in addition to chat is high on noise, depression on signal.  You desire a network that provides really high indicate value.

A cracking house to starting fourth dimension a learning network is Stock Twits.  The Stock Twits feed is a curated stream of tweets alongside high data value.  Via the feed, you'll notice sure as shooting contributors come upwards up in i lawsuit to a greater extent than in addition to again.  These are oft high value sources of data yous volition desire inward your network.  Of item value are the Sat $STUDY sessions from the Stock Twits feed that lead specific tweets in addition to links for their valuable content.  In general, the $STUDY postings offering a wide arrive at of observations, analyses, in addition to information.  You'll discovery item adept links via founder Howard Lindzon in addition to head of community evolution Sean McLaughlin. 

Yet or in addition to hence other house to construct your learning network is through sites that comb through content on the fiscal spider web in addition to curate selections.  Abnormal Returns offers a wide arrive at of links daily in addition to each calendar week selects hand podcasts in addition to highlights the most pop links of the week.  This too is a cracking agency to discovery valuable sources of data that tin travel out your regular listening in addition to reading.  On the podcast side, at that topographic point are the offerings from Michael Covel in addition to Barry Ritholtz that characteristic interviews alongside hand professionals inward finance.  Other first-class sources of links are Josh Brown via The Reformed Broker blog in addition to Barry Ritholtz's The Big Picture site.    

The acid examination for whatever improver to your learning network is that what yous read or head to truly does contribute fresh in addition to useful perspectives to your agreement in addition to trading of markets.  There is much to live on said for amusement in addition to it's slowly to acquire into surface readings of many sources, exactly what is ultimately valuable is what feeds your head.  You can't solve fresh puzzles unless yous convey the correct pieces.  And yous won't acquire all the pieces if you're locked within your head.  Through social media, yous tin displace from inquiry to edifice a virtual inquiry team.  It doesn't affair how emotionally controlled in addition to disciplined yous are:  yous can't merchandise the opportunities yous never see.

Further Reading:  Finding Trading Mentorship
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Info!! Parallel Processing Inwards Trading: Finding Meaningful Patterns

In yesterday's post, I described a procedure of reading inward parallel:  reading many books at a fourth dimension too gaining insight into a topic past times juxtaposing the views of many authors.  Parallel thinking is key to designing recognition:  inward simultaneously processing multiple events, nosotros are able to discern meaningful patterns connecting those events.

Take a expect at Rob Smith from T3 describing his 8 concealment trading station layout.  There are many charts on each screen, grouped past times sector, stock type, etc.  He therefore tin refresh all the screens instantly to persuasion many other stock groups based upon screening criteria.  Each stock tin last viewed across multiple fourth dimension frames.  As Rob points out, he monitors all of these screens throughout the twenty-four lx minutes menses to larn a feel for when opportunities are "lining up".  Then Rob volition dice "around the horn", looking at every stock inward the SPX to discover emerging trends or moves out of the ordinary.

What is noteworthy inward the video is that Rob is processing much to a greater extent than information much to a greater extent than speedily than the average trader.  He is reading the marketplace much similar I am reading books:  finding themes past times processing multiple sources inward parallel.  Instead of examining ane stock inward detail, consulting myriad indicators too nautical chart perspectives, Rob considers many stocks too finds patterns that cutting across them. 

If you lot jump over to SMB, you'll notice that their traders are utilizing tools that filter stocks based on liquidity too majority too therefore rails promising candidates tick past times tick to discover odd majority or gild stream patterns.  The applied scientific discipline acts equally an extension of the traders' parallel processing, reducing an impossibly large array of intraday information across stocks to a manageable universe of "in play" opportunities. 

Serial processing is mutual alongside investors:  excavation deeply into exceptional discipline areas to brand it at unique analyses that dice trading opportunities.  An illustration would last scouring the wording of Fed statements too speeches of Fed officials to discern shifts inward policy.  Parallel processing is less nearly deep analysis too to a greater extent than nearly rapid synthesis.  It is to a greater extent than mutual alongside high speed traders:  finding patterns inward marketplace activeness that give away shifts inward provide too demand.

Most of us receive thinking styles that are our unique blend of parallel too series processing.  An of import origin of failure for traders is attempting to adopt trading styles that produce non brand optimal role of our cognitive strengths.  An of import origin of failure for trading firms is failing to assess cognitive strengths equally constituent of the hiring process.  The myth continues that trading success is a constituent of personality, piece testify strongly suggests that personality tin hit lilliputian inward markets if the correct encephalon wiring isn't inward place. 

Emotions are a work inward trading entirely insofar equally they may nudge us from our cognitive strengths.  When trading becomes challenging, higher frequency traders should force themselves to expect at to a greater extent than things too feed their designing recognition; lower frequency investors should force themselves to recall to a greater extent than deeply nearly what they're doing too why.  Bad things hap when active daytraders reply to challenge past times slowing their thinking too when investors dice to a greater extent than speedy.

But of course, nosotros don't ask heed nearly whatsoever of that from would-be trading mentors too coaches.  They tell us to "trade our plan".  

Whatever.

Oil was weak most the twenty-four lx minutes menses on Friday.  High yield bonds underperformed stocks too therefore saw decent selling belatedly inward the session, equally sell programs took stocks off their highs.  That was a slice of designing recognition from yesterday's trading.  When all that began to unfold, my long ES seat came off the table.  Not all patterns are meaningful, exactly that was a motion painting we've seen earlier too I wasn't inward the mood to replay.  If you're entirely looking at the nautical chart of what you're trading, it's tough to meet those intermarket patterns inward existent time.  Markets are ever talking to each other; it tin last rattling helpful to bring together their conversation. 

Further Reading:  Data Rich, Information Poor
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Info!! 3 Superlative Reasons Why Traders Neglect To Merchandise Their Plans

A reader late asked for perspectives on the number of difficulty next trading plans.  If alone nosotros could faithfully follow our plans, the logic goes, nosotros would hold upwards positioned for success.

Maybe. 

Scanning my locomote amongst traders, hither are the 3 occur reasons traders neglect to human activity upon their plans:

1)  The plans are non worth acting upon.  This is a real mutual reason, but no i seems to utter nearly it.  I believe people oft veer from their plans because of intuitive wisdom.  They feel that markets bring changed as well as their plans are no longer relevant; they feel that their plans are non grounded inwards company agreement as well as prediction as well as thus create non trust them; and/or they feel that the plans are ones that they bring simply mimicked from others as well as non ones they genuinely bring confidence in.  The presumption inwards trading psychology discussions is that i should reliably follow one's plans.  My leaning is to query the premise.  Plans are alone worth next if they are good crafted as well as reverberate approaches to markets that bring a demonstrable edge.  If you lot don't stress examine your plans, markets volition stress examine you.

2)  We are intellectually prepared amongst plans, but non emotionally prepared to human activity upon them.  This is real relevant to the number of functioning anxiety.  When nosotros excogitation inwards i the world of heed (calm, focused), but execute our plans inwards a the world of flight/fight (aroused, impulsive), nosotros are much to a greater extent than prone to cognitive biases as well as reactive behavior.  This is peculiarly the instance when our plans telephone telephone for i degree of opportunity management, but emotionally nosotros tin tolerate alone a lower level.  It is real mutual that traders target i degree of opportunity taking (hoping for large profits), alone to "overreact" when their seat sizing leads to unanticipated losses.  One of the dandy benefits of visualization as well as exposure methods is that they permit us to emotionally gear upwards for stressful events.  As I utter over inwards the Trading Coach book, it is easier to follow our plans if nosotros bring already faced probable challenges to those plans.

3)  Distractions interfere amongst our follow-through on plans.  Not all disruptions of plans are emotionally triggered.  It is real mutual for traders to leave of absence distracted past times their physical environments.  This includes dissonance levels, equipment failures, as well as unanticipated personal as well as marketplace seat events.  Influenza A virus subtype H5N1 mutual instance of distraction is staring at screens, next markets tick past times tick, as well as so acting on a real short-term marketplace seat motion that had goose egg any to create amongst one's master copy plan.  I peculiarly similar biofeedback training, non alone every bit a agency for gaining emotional self-control, but every bit a agency for improving concentration, mindfulness, as well as the mightiness to melody out distractions.

In short, at that topographic point is no unmarried argue why traders neglect to human activity on their plans.  Keeping a detailed trading magazine tin hold upwards real helpful inwards identifying when you lot create as well as don't follow through on plans, revealing patterns inwards your ain trading psychology.  In general, my advice is to showtime brand certain your plans are worth next earlier you lot worry nearly finding psychological methods for improving your discipline.

Further Reading:  Why Traders Plan Trades But Don't Trade Their Plans
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Info!! The Perils Of Short-Term Bias In Addition To The Importance Of Feeding The Brain

Many observers of markets depository fiscal establishment complaint the style toward "group think":  expert ideas (and roughly non hence expert ones) grab on, eventually larn consensus, too hence larn oversubscribed.  Here's an illuminating practice regarding stock marketplace sentiment:

I went dorsum to 2006 too looked at the daily equity put/call ratio:  the ratio of puts to calls traded for every stock amongst listed options.  (Index options were excluded).  I hence divided the observation into halves, based on high vs. depression put/call readings.  When the ratio was inwards the upper one-half (more puts traded relative to calls), the side yesteryear side 10 days inwards SPY averaged a gain of  +.50%.  When the ratio was inwards the lower one-half (more calls traded relative to puts), the side yesteryear side 10 days inwards SPY averaged a gain of exclusively +.03%.  It's been when traders too investors request hold been relatively bearish that we've seen the lion's part of wide marketplace gains.

But suppose nosotros await at how persuasion is related to recent, past toll action.  When the put/call ratio has been inwards its highest quartile (most bearish), exclusively 45% of stocks request hold traded higher upward their five-day moving averages.  When the put/call ratio has been inwards its lowest quartile (most bullish), a lilliputian over 59% of stocks request hold traded higher upward their most recent five-day moving averages.  

In other words, persuasion is sensitive to recent toll action.  Traders too investors are susceptible to recency biases:  how markets request hold behaved over the concluding few days has impacted how bullish or bearish they are going forward.  (BTW, the correlation betwixt equity put/call ratio too the proportion of stocks higher upward their five-day moving averages is a statistically pregnant -.38).  The human style is to projection the recent yesteryear into the immediate future--and that leads to substantially poorer nigh term returns.

How tin nosotros extract ourselves from short-term data processing biases?  One agency is to brand certain our thought processes are operating at a fourth dimension frame greater than the ane nosotros are observing on screens.  Yesterday was a classic illustration for short-term traders:  nosotros started the twenty-four hours amongst pregnant weakness, precisely minor cap stocks notably could non merchandise to fresh multiday lows.  Indeed, my mensurate of monthly novel lows showed that nosotros had fewer novel lows yesterday than during the prior refuse early on inwards the month.  As yesterday's post service noted, when nosotros run into large groups of shares non participate inwards a marketplace move, nosotros request hold to query whether the motion genuinely represents a sustainable trend.  It oftentimes reflects rotation inside a attain market. 

But nosotros can't know that if nosotros can't stand upward dorsum from the fourth dimension frame we're trading too run into the larger picture.

Feeding the encephalon amongst large film thinking is a swell agency of freeing ourselves from becoming slaves to the brusk term.  This is why I similar reading well-assembled collections of links from sharp marketplace observers:

*  Charles Kirk posts "quotes for the day" in his service that are uniquely insightful.  I don't grip amongst all the perspectives offered, precisely around all of those views are plausible too good reasoned--which helps me query my ain thinking too non larn locked inwards a unmarried mindset.

*  Every day, Abnormal Returns is curating best content from the fiscal web.  Influenza A virus subtype H5N1 expert illustration are his links from yesterday:  several reads ended upward providing me amongst fresh perspectives.

*  Barry Ritholtz Trading too Cognitive Bias
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Info!! Lessons From A Successful Independent Trader

Here's a bang-up postal service from Bella regarding a pocket-sized independent trader, J. Park, who has grown his trouble organization human relationship to $100,000--and what that trader did to laissez passer on his success.  Several lessons jump out from his experience:

1)  He failed many times pocket-sized earlier finding success - We come across this designing with a surprising publish of the Market Wizards that Jack Schwager interviewed.  It took experiences with failure to in conclusion figure out what produced success.  The success came from perseverance in addition to the mightiness to larn from failures.

2)  He flora multiple mentors - I believe this is key.  Whether its chess, athletics, performing arts, or elite military, nosotros honour that successful performers are mentored in addition to trained.  The presence of multiple mentors permits an integration of perspectives that eventually leads i to their ain distinct approach.  Interestingly, I bring known the mentors mentioned yesteryear J. Park, such as @InvestorsLive, @Modern_Rock, @kroyrunner, in addition to @MikeBellafiore, to bring mentored other successful traders.  Think of all the stars that bring come upwards from basketball game coaches John Wooden in addition to Coach K:  practiced mentors create practiced performers.

3)  He focused on process - As he points out, nosotros can't command P/L; nosotros tin command our trading process:  what nosotros merchandise in addition to how nosotros merchandise it.  The successful trader may hold out discretionary inward their determination making, but volition non hold out random.  Successful trading is rule-governed, where the rules are derived from a clear agreement of who is inward the marketplace in addition to what they're doing.

There is a 4th element inward success, in addition to it helps explicate why many successful coin managers started out as active, short-term traders.  Short-term trading creates multiple learning trials.  If you lot are investing in addition to belongings positions for 6 months to a twelvemonth or more, how many learning trials arrive at you lot obtain over the course of written report of a career?  The daytrader has 200+ learning trials every year--more if they are using simulation tools, engaging inward review of recordings of their trades, etc.  That intensity of learning trials acts as a form of cognitive gym, edifice the determination making in addition to designing recognition skills of the trader.   

All the learning trials inward the world, however, volition non atomic number 82 to a cumulative effect if they are pursued haphazardly.  The argue nosotros come across mentoring as a telephone substitution element inward success across disciplines is that the correct didactics guides learning trials toward optimal development.  Great athletes don't simply exercise daily; they perform the correct exercises.  That is as truthful for developing traders.

Further Reading:  Trading With Focus
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Info!! Readings To Expand Our Trading Horizons

That's the beauty of gathering informed perspectives from across the fiscal world:  nosotros gain perspective past times standing apart from our ain views.  Here are to a greater extent than or less swell readings I've late come upward across:

*  great perspectives from Abnormal Returns.

*  An eye-opening assessment of why smart-beta strategies mightiness non travel together with thus intelligent.  Note the interesting determination nigh complex marketplace position strategies.

*  Top trading articles from Steve Burns, including i on the highs nosotros become from making coin inward markets.

*  A difficult hold off at whether nosotros tin hand the axe nosotros trust academic research published inward finance.  While the basis is crowing over how quantitative approaches direct maintain taken over the world, the truth is that the ones making coin are the ones that are methodologically sound.

*  Trading outcomes are just every bit much a resultant of cognitive science every bit personality traits.  Influenza A virus subtype H5N1 dissimilar sentiment alongside big implications for identifying talented traders.

Have a swell source to the trading week!

Brett
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Info!! Tracking The Footprints Of Provide In Addition To Bespeak Inwards The Stock Market

In approximately ideal, dispassionate basis all participants inwards fiscal markets would acquit similar my friend NRK too solely purchase at bid prices too sell at offers.  It's a groovy agency to create good inwards auction markets, too in that location are optimal execution platforms that volition make that for large marketplace participants.  The employment amongst optimal execution is that y'all oft cause got to hold back to buy the farm expert prices, too cost tin buy the farm away from y'all spell you're waiting.  That tin hap if you're looking for a manage inwards a hot existent estate marketplace or if y'all essay entering on boundary orders inwards a fast market.  

The truth of the thing is that the basis is neither ideal nor dispassionate.  People chase cost bubbles too puke out of positions when everyone else is doing the same.  Real basis traders--and fifty-fifty those execution systems--recognize this too allow for execution amongst urgency.  When markets are moving amongst signs of momentum, it's acceptable to elevator offers too hitting bids to participate inwards the movement.  Of course, inwards this less than ideal world, there's also that modest inconvenience called cognitive bias.  We all also oft extrapolate direct lines too remember that every displace higher or lower is a budding trend.  That gets us executing amongst urgency to a greater extent than oft than genuinely objective signs of momentum would dictate.

The long too curt of this foray into the vicissitudes of determination making is that fifty-fifty the largest marketplace participants larn out footprints equally to their intentions.  Yes, they tin chop orders upwards into pieces too execute inwards baskets too merchandise on dissimilar exchanges.  At the halt of the day, however, their transactions occur inside a bid/offer matrix, too they are either executing amongst urgency or they are not:  they are either willing to pay the seller's cost or they're willing to allow markets sell downwards to their desired buying level.

When y'all analyze markets transaction past times transaction, y'all tin really come across the stream of trades too book hitting bids too lifting offers--and y'all tin rail the evolving sentiment/urgency of marketplace participants.  That is highly useful data that is obscured past times looking at traditional intraday or daily charts.  H5N1 daily nautical chart is a telescope, revealing a large picture.  Viewing markets transaction past times transaction to discover the flows of trader behaviour requires a microscope.  H5N1 major fault that traders brand is attempting to engage inwards microscopic analyses past times changing the magnifying ability of their telescopes.

Above is a nautical chart that tracks a mensurate of "volume flow" that I've spent the amend business office of this weekend constructing.  It looks at every merchandise for every stock inwards the NYSE universe too identifies where the transacted cost occurred inside the bid/offer matrix existing at that time.  If the book of that transaction occurred nearer to the bid price, it is considered "selling volume".  If the book occurred nearer to the offering price, it is considered "buying volume".  The book stream mensurate is a running full of buying vs. selling volume.  If y'all remember of it equally a volume-weighted NYSE TICK mensurate or equally a cumulative Market Delta for all stocks, y'all wouldn't last far off the mark.

Much equally I dearest the TICK measure, it is democratic to the indicate of promiscuity.  All upticks too downticks are equal, whether they stalk from the smallest microcaps or the bluest of bluish chips.  That is non hence helpful when trading a capitalization-weighted index.  You tin cause got relative forcefulness or weakness amid modest caps equally business office of a sector rotation that volition skew the TICK measure--sometimes considerably.  H5N1 volume-weighted TICK measure, on the other hand, naturally weights larger, to a greater extent than actively traded issues to a greater extent than highly, providing a potentially amend supply/demand see for the stocks that thing inwards the index beingness traded.

Note to a higher house how selling flows were quite moderate inwards early on merchandise too hence accelerated fifty-fifty equally cost was topping out for SPY.  This is potentially useful data for the intraday trader.  

As I operate amongst the novel measure, I promise to portion farther findings too details.  The of import takeaway is non nigh the specific measure--it may or may non add together value over time.  Rather, what is of import is looking at markets inwards fresh ways too sustaining a procedure that periodically renews too extends your perspectives.  Looking at the same charts too indicators equally everyone else is a groovy agency of replicating the returns of everyone else.  If y'all wishing distinctive returns, y'all demand to see markets through distinctive lenses that break fresh opportunities.  It used to last that dependent meant next a exceptional develop of rules or processes.  In crowded, ever-changing markets, however, creativity is the novel discipline.

Further Reading:  Why to Keep a Journal
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Info!! Tin Private Traders Succeed Inward Today's Markets?

Lately I've encountered considerable hand-wringing every bit to whether private traders tin dismiss succeed inward markets increasingly dominated past times meddlesome fundamental banks, high speed algorithms, together with large amounts of working capital missive of the alphabet inward concentrated hands.  To last sure, the proportion of private traders that makes consistent coin is non high, peculiarly inward the daytrading world.  Of course, much the same could last said of the proportion of immature athletes, actors/actresses, or writers that succeed inward professional person careers.

What distinguishes successful private participants from the others?  Having worked at multiple trading firms together with interacted at a unopen grade with many traders for over a decade, I've identified 2 factors that seem to last responsible for success.

The offset distinguishing component is uniqueness of perception, which is related to creativity.  If a developing trader isn't seeing something unique inward markets, it's unlikely they volition generate unique results.  The successful trader looks at different marketplace data, different marketplace strategies, different markets together with relationships with markets.  There is non much "plain vanilla" inward what they do.  In an of import sense, they are playing a different game from consensus traders.

It is because of this uniqueness of perception that successful traders discovery unique edges inward markets.  They cultivate the uniqueness past times talking with successful marketplace participants inward different strategies together with markets; reading out of the box market-related research; together with trying out lots of novel ideas inward little size.  They beloved innovation; they beloved tinkering; they are intellectually curious--and they possess got the practical bent to pose novel perspectives into practice.  Many times, the quantitative report of markets--searching for reliable patterns inward markets--provides fuel for these fresh ideas.

The instant distinguishing component is self-awareness together with self-understanding.  The traders successful inward today's markets know their strengths, recognize their vulnerabilities, together with arts and crafts strategies that play to their cognitive, every bit good every bit personality, strengths.  Per Kahneman's distinction of thinking fast vs. slow, the genuinely splendid traders are either deep thinkers or fast thinkers.  They either analyze markets inward greater depth than others together with consider especial together with nuance that others missy or they sentiment markets broadly, seeing patterns emerge inward existent time.  The successful trader is distinctive inward i of those forms of information processing--and they brand the near out of that.  

It is this self-awareness together with self-understanding that helps the successful trader possess got a skillful sum of gamble when opportunities are acquaint together with stand upwards aside when they are not.  It is likewise this self-awareness that helps the non bad traders hire assistants together with construct out teams that expand their science sets together with trading scope.  Very, real often, the successful traders possess got benefited from formal mentoring from a to a greater extent than senior, skilled trader.  Very often, the successful traders eventually larn mentors themselves.  Success starts with raw materials (drive, persistence, curiosity) together with develops through real-time mentoring together with experience, only every bit it does for physicians together with plumbers.   

The bottom describe is that at every trouble solid where I work, I do consider successful traders who attain success consistently.  The chance sets may possess got changed over the years (more on that inward an upcoming post), but the talent together with skills to capitalize on those novel opportunities are last together with well.   Influenza A virus subtype H5N1 novel generation of traders is emerging, doing novel things to exploit those novel opportunities.

Further Reading:  The Single Most Important Trait of Individual Traders
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Info!! Looking Through The Marketplace Telescope Together With Microscope

In my recent post, I explained how denominating bars yesteryear book rather than fourth dimension tin flame hold upwards useful for traders. confirmations in addition to non-confirmations; yous tin flame intend of it every bit a marketplace telescope. The latter delves into the volume menstruation dynamics of the unmarried musical instrument I'm trading; it's the microscope.

One of the cognitive challenges of trading is coordinating perspectives from the telescope in addition to microscope: seeing the wood *and* the trees.

It's when the patterns nether the microscope confirm what you're seeing inward the telescope that yous tin flame execute good on the big ideas. Those are the trades that brand your solar daytime or week, when The Force is genuinely alongside you.

I'll seat an instance shortly.

Hat tip to Torley, who knows a affair or 2 almost The Force.
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Info!! Looking Through The Marketplace Telescope Together With Microscope

In my recent post, I explained how denominating bars yesteryear book rather than fourth dimension tin flame hold upwards useful for traders. confirmations in addition to non-confirmations; yous tin flame intend of it every bit a marketplace telescope. The latter delves into the volume menstruation dynamics of the unmarried musical instrument I'm trading; it's the microscope.

One of the cognitive challenges of trading is coordinating perspectives from the telescope in addition to microscope: seeing the wood *and* the trees.

It's when the patterns nether the microscope confirm what you're seeing inward the telescope that yous tin flame execute good on the big ideas. Those are the trades that brand your solar daytime or week, when The Force is genuinely alongside you.

I'll seat an instance shortly.

Hat tip to Torley, who knows a affair or 2 almost The Force.
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