Archive for December, 2009
Tools of the Central Bank to increase the money supply.
Duration : 0:12:28
http://www.informedtrades.com/
A lesson on the importance of money management in trading and how most traders of the stock, futures, and forex markets ignore money management because they do not consider it important and therefore loose money trading.
Why the Majority of Traders Fail
In our last lesson we finished up our series on Candlestick Chart Patterns with a look at the Inverted Hammer and the Shooting Star Candlestick Chart Patterns. In today’s lesson we are going to start a new series on money management, the most important concept in trading and the reason why most traders fail.
Over the last several years working in financial services I have watched hundreds if not thousands of traders trade, and over and over again I see smart people who have been intelligent enough to accumulate large sums of money in their non trading careers open a trading account and loose huge sums of money making what you would think are easily avoidable mistakes that one would think even the dumbest traders would avoid.
Those same traders are the ones that consider themselves too good or smart to make the same mistakes that so many others make, and that will skip over this section to get to what they feel is the “real meat” of trading, strategies for picking entry points. What these traders and so many others fail to realize is that what separates the winners from the losers in trading is not how good someone is at picking their entry points, but how well they factor in what they are going to do after they are in a trade into their trade entries and how well they stick to their trade management plan once they are in the trade.
For the few who do get that money management is far and away the most important aspect of trading, the large majority of these people don’t understand the large role that psychology plays in money management or consider themselves above having to work on channeling their emotions correctly when trading.
So in this series of lessons we are going to first start with a look at the psychology of money management and the role that this plays in causing so many traders to loose their shirts and then move on to ways of managing this before finishing up with specific strategies for managing trades once you are in them.
While not the most exciting part of trading, I assure you that if you don’t understand and work on the concepts presented in this section you are pretty much doomed to failure as a trader no matter how well you understand the other aspects of trading. Having said this I also assure you that if you do understand and work to expand your knowledge of the concepts presented in this series you will be well on your way to becoming a successful trader.
Duration : 0:3:0
http://www.informedtrades.com/5712-video-review-dr-alexander-elders-book-trading-living.html
A lesson on crowd psychology and how it relates to trading the stock, futures, and forex markets.
The best summary that I have seen on this subject, as well as a great book on trading in general is Dr. Alexander Elder’s book Trading for a living. As the Trader and Psychologist points out in his book, people think differently when acting as part of a crowd than they do when acting alone. Dr Elder points out that “People change when they join crowds. They become more credulous, impulsive, anxiously search for a leader, and react to emotions instead of using their intellect.”
In his book Dr. Elder gives several examples of academic studies which have been done which show that people have trouble doing simple tasks such as choosing which line is longer than the other when put in a situation with other people who were instructed to give the wrong answer.
Perhaps no where is the strange effect is the psychology of crowds seen than in the financial markets. One of the more recent examples as I have spoken about in my other lessons of the effect that the psychology of crowds can have on the markets is the run-up of the NASDAQ into 2000. As you will find by pulling out the history books however, this is not an isolated incident as financial history is littered with similar price bubbles created and then destroyed in the same way as the NASDAQ bubble was.
So why does history continue to repeat itself? As Dr. Elder points out in his book, from a primitive standpoint chances of survival are often much higher as part of a group than they are alone. Similarly war’s are often one by militaries with the strongest leaders. It is thus only natural to think that human’s desire to survive would breed a desire to be part of a group with a strong leader into the human psyche.
So how does this relate to trading? Well as we learned in our lessons on Dow Theory, the price is representative of the crowd and the trend is representative of the leader of that crowd. With this in mind think about how difficult it would have been to short the NASDAQ at the high’s in 2000, just at the height of the frenzy when everyone else was buying. In hindsight you would have ended up with a very profitable trade but, had the trade not worked out, people would have asked how could you have been so dumb to sell when everyone else knew the market was going up?
Now think about all the people who held on to their positions and lost tons of money after the bubble burst in 2000. As they had lots of company there were probably not a whole lot of people who were laughing at them. Yes they were wrong but how could they have known when so many others were wrong too?
By looking at this same example, you can also see how panic selling often ensues after sharp trends in the market as this is representative to a crowd whose leader has abandoned them.
In order to trade successfully people need a trading plan which is designed before entering a trade and becoming part of the crowd so they can fall back on their plan when the emotions which are associated with being part of a crowd inevitably arise. Successful traders must also realize that there is a time to run with the crowd and a time to leave the crowd, a decision which must be made by a well thought out trading plan designed before entering a trade.
That completes our lesson for today and our lessons on the psychology of money management. In tomorrow’s lesson we are going to begin looking at different strategies which can be used to manage a trade once you have entered, which many traders also use to help remove some of the negative emotional effects of trading as part of a crowd.
As always if you have any questions or comments please leave them in the comments section below so we can all learn to trade together, and good luck with your trading!
Duration : 0:7:0
‘VIEW MY SHORT FILM TRAILER’ http://www.youtube.com/watch?v=U1yUajuBdrc
Tom Cruise and Cuba Gooding Jr. talking about money in the film ‘Jerry Maguire’.
Duration : 0:1:23
Informational video produced by the oldest non-profit organization formed to help inventors protect and market their inventions. The founder of the Inventor’s Assistance League (IAL), Ted De Boer, tells about his organization that he started in the early 60’s. IAL teaches inventors a technique known as “pre-patent protection” that allows an inventor to discuss his/her ideas with the market under controlled conditions to determine if the idea has commercial/market value. Thereby saving the expense of a patent until the time is right. Note: IAL recently moved. Please refer to the address on the website… inventions.org. For further information, contact The Inventors Assistance League directly at (818) 246-6542 or write them at info@inventions.org
Duration : 0:27:28
Does it take fiat currency of a country (or countries) to make more money? Does the economy come down to production and consumption?…so I would need to produce something to make more money? Can I make more money without producing something and just investing? I want to learn more; thanks for your responses.
i think, you can try overnight income investment. it more simple, workable, profitable and no risk investment. actually, your money will work for you, even while you sleep, and you get your first overnight income. your money grow daily.
Hahaha …
Amschel Mayer Rothschild is quoted as saying: "Permit me to issue and control the money of a nation, and I care not who makes its laws." The politicians don’t control the bankers. The bankers control everything. These are the very same people (the moneychangers) Jesus kicked out of the Temple and for pretty much the same reason – usery!
There is no advantage to a fiat currency other than the ability to manipulate its so-called value. Perfect example. 1933 depression caused directly by the central bankers. Gold is worth $20 an ounce as evidenced by the many $20 gold pieces people had in their pockets.
FDR does two things. First he confiscates all the privately held gold under penalty of fine and imprisonment. Then he declares a bank "holiday" closing banks because there was a run on the currency. Watch closely. Here comes the slight of hand. When the banks reopened gold is now valued at $35 an ounce (maybe it was $32.50). Anyway, where’s all the gold? It’s been shipped off to the central banks in Europe. Who made out? The central bankers. Their gold skyrocketed from $20 to $35 an ounce in a matter of a few days. Who lost? Joe Six-pack Americana.
I would also like to know the affects of depression/deflation if it comes true in either cases. Is buying gold sensible or stacking money sensible in India?
The Indian Rupee is not on the gold standard (I don’t believe there is any currency that is on the gold standard nowadays).
The rupee used to be fixed to the British pound when that currency was on the gold standard.
The decision to buy gold is a separate matter, and one that there is no single answer – just lots of opinions.
wtf?! $60 for an ae sweater? i mean seriously
sorry, make that $90
model, "yo wallet" is directly connected to the economy
stay in school
That’s not even good quality cashmere.
http://www.jcrew.com/AST/Browse/MensBrowse/Men_Shop_By_Category/outerwear/wool/PRDOVR~80550/80550.jsp
That, on the other hand, is =]
Anyone else ever notice this ? It’s always the same story there every election year. What the hell are they doing wrong and why do they need a new President to fix it ? After all they voted for Bush so isn’t it a case of you get what you asked for ?
I live in Ohio…in fact I came to Ohio because of a better job opportunity…and guess what happened? My job got outsourced…along with many other jobs—and then the closings of plants of GM. The truth is that Ohio once was a good, booming economy with something for everyone, but the policy of the Bush administration has destroyed that–I mean, how can you give tax breaks to companies to move overseas and NOT give tax breaks to companies that want ot operate in the U.S.? Something is wrong with that.