Afin's trading diary

[augubhai]

For those who wish to dig in and read more -- here is a a great suggestion. It is by the Nobel Prize Winning Economist Daniel Kahneman. It is a brilliant read for those who would want to ward of the curse of following the herd. Each chapter is a masterpiece in itself and I highly recommend it.

https://www.amazon.in/Thinking-fast-slow-Daniel-Kahneman/dp/1846146062

Following is a great description of the book - again by a future Nobel Laureate who would go on to win it later

https://www.newyorker.com/books/pag...s-who-changed-how-we-think-about-how-we-think

Reading this one right now.

 

[afin]

Reading this one right now.

its a brilliant book. Also if I may please recommend "Manias, Panics, andCrashesA History of Financial Crises" by Kindleberger. It is again a very good book

 

[afin]

One of the most important things I was taught in my grad school was the concept of "groupthink".

I was more than pleasantly surprised when I stumbled upon this concept after all these years while looking for something else on the investopedia site. There's tonnes of material available out there as to what constitutes "groupthink" but I think that the investopedia site does a fab job in explaining the concept as lucidly as possible without beating around the bush.

Here is the link -

https://www.investopedia.com/terms/g/groupthink.asp

The following are from the investopedia site itself. Superb read. I implore you all to read it

What Is Groupthink?

Groupthink is a phenomenon that occurs when a group of individuals reaches a consensus without critical reasoning or evaluation of the consequences or alternatives. Groupthink is based on a common desire not to upset the balance of a group of people. This desire creates a dynamic within a group whereby creativity and individuality tend to be stifled in order to avoid conflict.

Collectively, the group rationalizes away any possible negative outcomes. Members are convinced their cause is right and just; they thus ignore any moral quandaries of their decisions. The group body tends to ignore the suggestions of anyone outside the group.

If one wants to read more about groupthink from a financial point of view, the following is a good article too.

https://www.irishtimes.com/opinion/...king-groupthink-has-run-out-of-road-1.3862656

 

[afin]

Couldn't agree more!

https://twitter.com/i/web/status/1196815760632369152

 

[afin]

SL was getting hit on either side on the instrument I had chosen to work with. I had losses coming in the last 3 to 4 trading sessions. Had therefore been extensively backtesting once again.

My choice of instrument seems a bit suspect and I probably need to focus on choice aspect once again. Signals also need to be less in number. Plus the burden of MCX is that one ends up working so many extra hours.... even though it is just one instrument that I trade with. I wonder how people manage with multiple trading instruments! It is very demanding as it is to focus completely on one instrument at a time!

Trading is an intensive and exhaustive business which requires long hours and a lot of attention - even if one has mechanized the process. I will have to reduce the number of trading hours if I need a sustainable life with adequate rest mentally and emotionally.

 

[afin]

Absolutely right!

https://twitter.com/i/web/status/1197000795427729408

 

[Aman_trader25]

Absolutely right!

https://twitter.com/i/web/status/1197000795427729408

oh i so agree! have had the pleasure of meeting 2-3 such traders myself

 

[afin]

Such a scary turn of events. Forecasted though.

https://twitter.com/i/web/status/1198060913896480768

 

[afin]

As someone who ran 4 marathons in the past, I cannot agree more.

It is very sad that due to my knee condition now that I have been asked not to run at all. As a result, gave up running some 5 years ago completely!

https://m.timesofindia.com/city/mum...leshow/72190609.cms?__twitter_impression=true

 

[afin]

Shyam Sekhar has something to say about broking houses with prop shops.

https://twitter.com/i/web/status/1198425123272790017

I think it is a very valid point he makes. What if your own orders and by that, millions of other small traders order books are stacked against your ownself? That leverage (not in the broking sense!) and power that comes along with it is uses against you? I am thinking out aloud here and in a way also agreeing to what he is putting forth.