Teach A Man To Fish And.........

lvgandhi · #**621** 31st May 2007, 09:08 PM

Dear Saint
Very nice explanation. I have learnt more. With your statement "following divergences blindly,and we might have lost this present run-up from 1300 to 1700.", I totally agree. But it will be helpful if you can explain how to use divergence, but at the same time don't loose runs like this.

hari09omkar · #**622** 31st May 2007, 09:40 PM

Quote:

Originally Posted by Saint

There are some nice ones from Brett Steenbarger..........if you haven't read the below,do so.Another piece of trading wisdom.........

Saint

The Most Dangerous Word in the Trader's Vocabulary

I'm convinced the most dangerous word in the trader's vocabulary is "should". Should can turn a winning day into a psychological loser, when a trader focuses on that move he or she should have traded. Should can make us miserable when we don't live up to our personal or financial expectations. Sometimes we focus so much on how we should trade or on how others tell us we should trade that we drift away from our own talents and interests.

But those sabotages are nothing compared to getting locked into views of how the market should be trading:

* The dollar is plunging, so we should get inflation and the market should drop!

* The market is in an uptrend, so we should rally today!

* We're in a growing deficit as a country; we're mired in Iraq; oil prices are skyrocketing, so we should have a bear market!

I can tell you this: I became a better trader when I started focusing on what the majority of stocks were doing rather than on what I thought the market should do.

On Monday, I thought we should get a higher market on Tuesday. When I saw that fewer stocks were making new highs in the morning even as the ES was moving to new price highs, however, I dropped the should and sold the open.

And, yes, I--like so many participants in the financial markets--lament the high debt, weak dollar, and rising commodity prices. But we have recovered from a steep decline, dollar flows into stocks are above average, and--as of Monday--well over 2000 stocks had made fresh 20-day highs. No matter how much I think the market should go down, it's not what the market data have been telling us.

"Should" puts my judgment ahead of the market's objective reality. And that's why it's the most dangerous word in the trader's vocabulary.

Now as these good writings of Steenbarger are coming and this thread is almost a comprehensive guide to beginner trader,let me put another gem of Dr. Brett,which may be of some help.
This link was provided to me in my thread,when I was just scratching the internet and struggling to find a way to start as a trader,by CreditViolet.Being interested in the basics of trading those days,this write up of the Dr. was sort of boring to me and of little importance.
But now,I can realize its depth.
Starters who have finished this thread of Saint from start to till date,and wanting to make a living out of market will find it useful.
MYTH#3 is very important.
Here it is:
http://traderfeed.blogspot.com/2006/...f-trading.html
Thanks.

Saint · #**623** 31st May 2007, 10:22 PM

Quote:

Originally Posted by hari09omkar

Now as these good writings of Steenbarger are coming and this thread is almost a comprehensive guide to beginner trader,let me put another gem of Dr. Brett,which may be of some help.
This link was provided to me in my thread,when I was just scratching the internet and struggling to find a way to start as a trader,by CreditViolet.Being interested in the basics of trading those days,this write up of the Dr. was sort of boring to me and of little importance.
But now,I can realize its depth.
Starters who have finished this thread of Saint from start to till date,and wanting to make a living out of market will find it useful.
MYTH#3 is very important.
Here it is:
http://traderfeed.blogspot.com/2006/...f-trading.html
Thanks.

Thanx Hari!

Saint

gupta.deep · #**624** 1st June 2007, 01:41 PM

Hi Saint,

Thanks very much for the explanation. What I understand from explanation is :-

Quote:

"Yes,there are negative divergences on the TRIX and possibly many other indicators........but following divergences blindly,and we might have lost this present run-up from 1300 to 1700.
"

Divergences are for giving us warning and not for acting blindly on them,(Like Yellow light on a crossing, we get cautious and stop or cross based on other factors)

Quote:

Summary :
1)Weekly uptrend and Daily is in a downtrend,buy on confirmation of the daily getting into an uptrend.

2)Weekly uptrend and the Daily in pullback territory to the trendline,you could buy the dips .....but beware of the gradient getting steeper.Once that happens,think short term.

We may enter the scrip with short term in our mind and having tight stop losses.

Quote:

Daily Charts:We are presently in a short term uptrend in RelInds....this move up may not last,but if you are a person who plays the 60min or daily charts,there is money to be made.

and finally, no I do not like to play short term due to the nature of my job.

Would like to get in a scrip only after being reasonably sure that it is in long term uptrend. Won't like to watch a scrip daily except for watching its closing price for breaking of stop loss / trailing stops /trend line and do detailed analysis on weekends only.

Thanks Saint for your so simple to understand yet effective analysis.

SKG

gupta.deep · #**625** 3rd June 2007, 12:27 AM

Hi All,

PFA the analysis for Indiabulls charts as I envisage it. Need your wise comments on it.

1. As per the weekly chart, indiabulls is in an uptrend but currently in pullback mode. So no entry in the stock till there is a confirmation of continued uptrend. The support line must hold and weekly should go up from the support levels.

2. I think there is a descending triangle forming in daily charts. Since descending triangle most probably breakout on the downside, it is another caution to us to stay away from the stock for now.

Can you please see the attached charts and let me know if I am on the correct path.

SKG

P.S. I have downloaded Fibotrader and updated data uptill May 07, thanks to Soumya. I hope to be comfortable with it soon.

gupta.deep · #**626** 3rd June 2007, 01:18 AM

Hi All,

Is there a new long term uptrend in Balrampur Chini ?

Pls. see the attached weekly and daily charts and let me know if I am correct.

Weekly has broken the downtrend line and posted a new pivot high and a new pivot low. Currently in pull back mode but still above the previous pivot low. Can we enter the stock if it turns upwards without breaching the previous pivot low of about 61.50?

On daily, it is near its support/resistance line. This line has earlier provided support twice, and a breakdown from this line led to downtrend. Then it prooved to be a ressistance once and now it is trying to break this ressistance. If we can have a breakout on upside, may be we can have a long term uptrend.

Am not sure what could be the stop loss, target etc.

Forgive me if I am sounding too excited. Please consider that this is my only 3rd analysis and if I am overreacting or wrong, pls. do let me know now. It is very easy to mould the clay than the pot.

SKG

kkseal · #**627** 3rd June 2007, 11:37 PM

Quote:

Originally Posted by hari09omkar

Now as these good writings of Steenbarger are coming and this thread is almost a comprehensive guide to beginner trader,let me put another gem of Dr. Brett,which may be of some help.
This link was provided to me in my thread,when I was just scratching the internet and struggling to find a way to start as a trader,by CreditViolet.Being interested in the basics of trading those days,this write up of the Dr. was sort of boring to me and of little importance.
But now,I can realize its depth.
Starters who have finished this thread of Saint from start to till date,and wanting to make a living out of market will find it useful.
MYTH#3 is very important.
Here it is:
http://traderfeed.blogspot.com/2006/...f-trading.html
Thanks.

Excellent article. Thank you (& CV) for the link.

I thought Steenbarger was another of those 'Trading Psychology & discipline' blah-blah guys, but this article shows he's not.

Regards,
Kalyan.

Saint · #**628** 3rd June 2007, 11:58 PM

Quote:

Originally Posted by kkseal

Excellent article. Thank you (& CV) for the link.

I thought Steenbarger was another of those 'Trading Psychology & discipline' blah-blah guys, but this article shows he's not.

Regards,
Kalyan.

Saint · #**629** 4th June 2007, 12:02 AM

Quote:

Originally Posted by gupta.deep

Hi Saint,

Thanks very much for the explanation. What I understand from explanation is :-
[b]

Divergences are for giving us warning and not for acting blindly on them,(Like Yellow light on a crossing, we get cautious and stop or cross based on other factors)

Right on,my friend!

Quote:

We may enter the scrip with short term in our mind and having tight stop losses.

Yep.

Quote:

and finally, no I do not like to play short term due to the nature of my job.

Would like to get in a scrip only after being reasonably sure that it is in long term uptrend. Won't like to watch a scrip daily except for watching its closing price for breaking of stop loss / trailing stops /trend line and do detailed analysis on weekends only.

Thanks Saint for your so simple to understand yet effective analysis.

SKG

All the best!
Saint

Saint · #**630** 4th June 2007, 10:53 AM

More on Steenbarger and why traders knowing fully well the importance of discipline in trading tend to lose it...............

All the best!
Saint

Why traders lose their discipline
By Brett Steenbarger

When traders lose money, they often attribute the problem to a lapse of discipline. Such a lack of consistency, however, is actually the result of many different problems--not the cause. Traders lose discipline with trading for the same reasons that dieters lose discipline with dieting or people getting in shape lose discipline with exercise. Quite simply, our moods, needs, and mind states of the moment tend to overwhelm our longer-range intentions. We pursue short-term pleasures (and avoid short-term discomfort) at the expense of longer-term rewards.

Here are some common reasons why traders (and most other human beings!) fall short of being fully intentional:

Environmental distractions and boredom cause a lack of focus - All of us have limits to our attention span and these are easily taxed during quiet times in the market;

Fatigue and mental overload create a loss of concentration - The demands of watching the screen hour after hour make it difficult to be sharp, creating fatigue effects that are well-known to pilots, car drivers, and soldiers;

Overconfidence follows a string of successes - It is common for traders to attribute success to skill and failure to situational, external factors. As a result, a string of even random wins can lead traders to become overconfident and veer from trading plans--especially by trading too frequently and/or trading excessive size;

Unwillingness to accept losses - This leads traders to alter their trade plans after trades have gone into the red, turning what were meant to be short-term trades into longer-term holds and transforming trades with small size into large trades by adding to losers;

Loss of confidence in one's trading plan/strategy because it has not been adequately tested and battle-tested - It is difficult to tolerate even normal drawdowns unless you have confidence in your methods. This confidence does not come from mere positive self-talk. Rather, it is a function of testing your methods (historically and in real-time) and seeing in your own experience that they truly work;

Personality traits that lead to impulsivity and low frustration tolerance in stressful situations - Psychological research suggests that some individuals are more impulsive than others and less conscientious about adhering to plans and intentions. These personality traits often are accompanied by stimulation-seeking and a high degree of risk tolerance: a deadly combination.

Situational performance pressures - These include trading slumps and increased personal expenses that change how traders trade and lead them to place P/L ahead of making good trades. By worrying too much about how much money they make, traders can no longer follow markets with a clear head;

Trading positions that are excessive for the account size - This is much more common than is usually acknowledged. It creates exaggerated P/L swings and emotional reactions that interfere with cool, calm planned behavior;

Not having a clearly defined trading plan/strategy in the first place - Interestingly, many traders do not consider themselves to be discretionary traders, but in fact do not have a firm, explicit set of trading rules that they follow. It is difficult to be consistent with a plan (and to evaluate your consistency), if you don't have the plan clearly laid out;
Trading a time frame, style, or market that does not match your talents, skills, risk tolerance, and personality - All too often, traders veer from their plans because those plans are ones that they feel they *should* follow, but that don't truly come naturally to them. These departures from discipline are actually unconscious attempts to trade in a style that is more in tune with the trader's skills and talents.

As you can see, not all discipline problems have their origins in the trader's psychology. Many times, the loss of discipline reflects problems with trading itself. Discipline in trading is not so different from "discipline" in a romantic relationship: if you're doing the right things, there's little need or desire to stray. But if your trading is not meeting your needs, it's all to easy to break your trading vows.

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