Plan the trade

A planned trade is one that is guided consciously, filtered according to a variety of criteria that are designed to provide a positive expectancy. The opposite of a planned trade is an impulsive one, in which traders enter markets before explicitly identifying what they are doing and why. The difference between planned and unplanned trading is one of intentionality: being proactive in taking controlled risks vs. being reactive to what has already occurred in markets. Even the most intuitive and active trader can trade in a planned manner, if many of the elements of planning are achieved prior to entering positions.

So what are these elements of planning? The ideal trade identifies:

1) What you’re trading – Why are you selecting one instrument to trade (one stock, one index) versus others? Which instruments maximize reward relative to risk?

2) How much you’re trading – How much of your capital are you going to allocate to the trade idea versus other ideas?

3) Why you’re trading – What is the rationale for the trade? Why does the trade idea provide you with an “edge”?

4) What will take you out of the trade – What would lead you to determine that your trade idea is wrong? What would tell you that the trade has reached its profit potential?

5) Where you will enter the trade – Given the criteria that would take you out of the trade, where will you execute your idea to maximize the reward you’ll obtain relative to the risk you’ll be taking?

6) How you will manage the trade – What would have to happen to convince you to add to the trade, scale out of it, and/or tighten your stop loss?

ARE YOU LAZY

Chinese Story : Practice Makes Perfect

In ancient times, there was a famous general. He shot arrows with such accuracy that at the time no one was able to better him. He himself believed that he was fabulous. One day he was at the archery field during a demonstration. When he shot the gallery would from time to time erupt into applause, but looking around he discovered that two old people selling oil to the people next to the fields were not clapping.

Only with a slight nod of their heads did they acknowledge his shots. Unhappily he walked up to the old couple and asked, "It seems you understand archery, what do you think about my archer ?" The old people answered, "We don't understand archery, we only watch." Infuriated the general asked, "If you don't understand archery, why don't you applaud ?" The old man slowly answered, "It's because of the oil that I sell."

He produced a bottle and placed it on the ground, then placing a copper coin on the mouth of the bottle, and using a spoon poured the oil into the bottle through the tiny hole in the coin. He spilled not a drop and all the people around couldn't help but applaud, and the old man modestly said, "Actually it is only practice."

Many times we are amazed by how skillful someone in doing his/her performance, work and productivity. But what we don't realize is that it takes lots of time, learning experiences, failures, and struggles to produce such maximum performance.

And when we achieve such level we shouldn't be boastful and live in pride. Since we realize that almost anyone can do what we do if they would go through what we have been through.

Check out this amazing Roger Federer Perfection

Practice Before Act

Trading Mistakes

Letting small losses turn into large losses.
– Refusing to take a loss at all.
– Overbetting.
– Bottom fishing/Catching falling knives.
– Averaging down.
– Shorting bulls and buying bears.
– Confusing the company with its stock.
– Falling in love with a “story.”
– Following the leader.
– Buying IPOs.
– Finding the Holy Grail.
– Overtrading.
– Excessive tape watching.
– Being undercapitalized.
– Letting the tax tail wag the stock dog.
– Relying on Blue Channels and Website Analysts
– Thinking this market stuff is easy.
– Thinking rather than looking.

“Rich people don’t make big bets.

“Rich people don’t make big bets. Really rich-and smart-people don’t make big bets. First they are not out to “prove” anything, they are out to make more money, and second, they know that risk control is as important as the other two legs of speculation, selection and timing. That is all this business of … trading gets down to, selection, timing, and risk control.”

“Trading well is not easy, but it is something you can learn if you have the perseverance combined with the humility to be realistic about your own strengths and weaknesses.”

“Most often, traders have four fears. There’s the fear of being wrong, the fear of losing money, the fear of missing out and the fear of leaving money on the table. I found that basically, those four fears accounted for probably 90% to 95% of the trading errors that we make. Let’s put it this way: If you can recognize opportunity, what’s going to prevent you from executing your trades properly? Your fear. Your fears immobilize you. Your fears distort your perception of market information in ways that don’t allow you to utilize what you know.”

4 Elements Required to Trade Successfully

There are 4 elements you must master:

* Idenifying support and resistance. If you are trading in the middle of the range, you will be more suseptible to what seem to be reversals, but are actually just noise in between a trading range. Do not enter if your stock has moved more than 5 percent above support or the breakout point.

* Identifying volume patterns. If you buy a dip on high volume, there’s a higher probability of getting caught in the midst of a reversal. Same goes for low volume breakouts.

* Set appropriate stops, based on support, resistance and percentage of your trading portfolio. Even if you take the appropriate cautions, you can still get reversed. It shouldn’t hurt when you do.

* Do not trade scared. Trust your analysis and risk parameters.

It has taken me time to master these four elements to trading, and at times I still fall into my old habits. The key is to constantly assess both the technical and mental aspects of your game. There are 4 elements you must master:

* Idenifying support and resistance. If you are trading in the middle of the range, you will be more suseptible to what seem to be reversals, but are actually just noise in between a trading range. Do not enter if your stock has moved more than 5 percent above support or the breakout point.

* Identifying volume patterns. If you buy a dip on high volume, there’s a higher probability of getting caught in the midst of a reversal. Same goes for low volume breakouts.

* Set appropriate stops, based on support, resistance and percentage of your trading portfolio. Even if you take the appropriate cautions, you can still get reversed. It shouldn’t hurt when you do.

* Do not trade scared. Trust your analysis and risk parameters.

It has taken me time to master these four elements to trading, and at times I still fall into my old habits. The key is to constantly assess both the technical and mental aspects of your game.

Never Argue

Remember, the market is designed to fool most of the people most of the time. Sometimes, the market will go contrary to what speculators have predicted. At these times, speculators must abandon their predictions and follow the action of the market. Never argue with the tape. Markets are never wrong, but opinions often are. I only try to react to what the market is telling me by its behavior.——Jesse Livermore

Entering the Trade

1. 1.Before entering any trade, you should consider the other side of the trade and state the reasons you’d take the other side of the trade. This helps you objectively enter a trade with a full understanding of the major risks that involved.
2. Analyze your behavior from the beginning to the end of the trading process (from idea generation to entry and finally to exit) - what are the areas you can improve to help your trading profitability the most?
3. Keep a trading journal of your thoughts on open positions and new ideas - writing things down helps you objectively look back and see where you went right and wrong.
4. Fear blinds us to opportunity; greed blinds us to danger – emotions cause “perceptual distortion” where we only see the part of the picture that our beliefs allow us to see.
5. We are likely to continue doing things for which we are rewarded -this can cause us to get too bullish after the bulk of the uptrend has occurred, or get too bearish near the lows.
6. Fear of regret slants stock market behavior toward inaction and conventional thinking - the person who is afraid of losing is usually defeated by the opponent who concentrates on winning (an analogy for sports fans is the Prevent defense in football – playing “not to lose” only prevents you from winning).
7. Can’t have a personal agenda to prove your self-worth in the markets - the focus must be on following your plan to maximize the ability to make money.
8. Don’t get overly attached to any one view on a stock or market - don’t talk to others about open positions; it just makes it that much harder to exit when your plan says it should.
9. Our predictions are only as good as the information available to us - objectively look at the indicators and data you use, to get the best quality of information and focus available
10. People prefer for gains to be taken in several pieces to maximize their feeling good about their ability, while they prefer to take all their losses in one big lump to minimize the pain they feel.
11. People prefer a sure gain compared to a high probability of a bigger gain, so they can say they made a profit; in contrast, people will speculate on a high probability of a bigger loss over a sure smaller loss, because they don’t want to feel like a loser. In trading, we must flip around the conventional emotions to allow us to let profits run while cutting losses shorter.

FOURTY

1. Trading is simple, but it is not easy.

2. When you get into a trade watch for the signs that you might be wrong.

3. Trading should be boring.

4. Amateur traders turn into professional traders once they stop looking for the “next great indicator.”

5. You are trading other traders, not stocks or futures contracts.

6. Be very aware of your own emotions.

7. Watch yourself for too much excitement.

8. Don’t overtrade.

9. If you come into trading with the idea of making big money you are doomed.

10. Don’t focus on the money.

11. Do not impose your will on the market.

12. The best way to minimize risk is to not trade when it is not time to trade.

13. There is no need to trade five days a week.

14. Refuse to damage your capital.

15. Stay relaxed.

16. Never let a day trade turn into an overnight trade.

17. Keep winners as long as they are moving your way.

18. Don’t overweight your trades.

19. There is no logical reason to hesitate in taking a stop.

20. Professional traders take losses because they trust themselves to do what is right.

21. Once you take a loss, forget about it and move on.

22. Find out what loss parameters work best for your setup and adjust them accordingly.

23. Get a feel for market direction by “drilling down” (looking at multiple time frames).

24. Develop confidence by knowing and executing your trade setups the same way every time.

25. Don’t be ridiculous and stupid by adding to losers.

26. Try to enter a full size position right away.

27. Ring the register and scale out of your position.

28. Adrenaline is a sign that your ego and your emotions have reached a point where they are clouding your judgment.

29. You want to own the stock before it breaks out and sell when amateurs are getting in after the move.

30. Embracing your opinion leads to financial ruin.

31. Discipline is not learned until you wipe out a trading account.

32. Siphon off your trading profits each month and stick them in a money market account.

33. Professional traders risk a small amount of money on their equity on one trade.

34. Professional traders focus on limiting risk and protecting capital.

35. In the financial markets heroes get crushed.

36. Stick to your trading rules and you will never blow up your trading account.

37. The market can reinforce bad habits.

38. Take personal responsibility for each trade.

39. Amateur traders think about how much money they can make on each trade. Professional traders think about how much money they can lose.

40. At some point all traders realize that no one can tell them exactly what is going to happen next in the market.

WHAT IS TODAY

CURRENCY OVERVIEW

The dollar index .DXY was steady at 77.096. Technical analysts say it needs to extend above its Oct. 12 high of 77.93 to signal a short-term bottom is in place after Friday's 10-month trough of 76.144.

The dollar was soft against the yen at 81.21 yen JPY=, edging back toward a 15-year low of 80.88 hit last week and hovering not far off a record low of 79.75 set in 1995.

SECTOR OVERVIEW

BSE

BE DISCIPLINED

The Groove

A day trader should leave no room for fear and greed to take over, otherwise, this will be the key to your losses. A good trader should be disciplined, make discipline a habit, and act in accord with trading systems/strategies. You can do your trade in a consistent and reliable manner this way. Certain situations require an individual to make decisions based on their pre-set criteria and parameters.

You should make it a point to habitually follow your trading system/plan. When you’re making trading decisions, don’t let your emotions rule you. A day trader should always be disciplined, and once you attain your objective, leave the market first. Oftentimes people plunge in deeper because they are influenced by greed and fear.

There are also day traders who are quite reluctant to lose money. For instance your stock goes down,and you’re still hoping that after some time it will rise again. And to your surprise, the share price goes further down. If only you were not reluctant to lose money, you could have sold it the first time its price went down, and prevent further loss.

Day traders need to make fast executions and confirmations of the trade, so you must have a fast internet connection. They also need to receive and deliver quotes, news, and other pertinent market data. A fast internet connection allows you to make your day trading in a timely fashion. If you’re serious with your day trading. You would need hardware and software requirements to put a sufficient platform at home for online trading.

You can practice through simulated trading before using real money. Here you can incorporate all your trading techniques and see if they actually work. Don’t be a scared to lose a certain amount of money. But it doesn’t mean that you should not limit your losses. Most importantly, you should learn from your past losses. Becoming a day trader is a simple thing. But in any case it requires dedication, time and effort. You will reap profits that you’ve never imagined, if you are able to put all of these things together.

NASDAQ

S
USMARKET EXPECT OPEN HIGH AND CLOSE NEAR ITS OPEN WITH POSITIVE SIGN

NEWSLETTER

How to form a habit

This has nothing to do with nuns' clothing. Habits are those behaviours that have become automatic, triggered by a cue in the environment rather than by conscious will. Health psychologists are interested for obvious reasons - they want to assist people in breaking unhealthy habits, while helping them adopt healthy ones. Remarkably, although there are plenty of habit-formation theories, before now, no-one had actually studied habits systematically as they are formed.

Phillippa Lally and her team recruited 96 undergrads (mean age 27) and asked them to adopt a new health-related behaviour, to be repeated once a day for the next 84 days. The new behaviour had to be linked to a daily cue. Examples chosen by the participants included going for a 15 minute run before dinner; eating a piece of fruit with lunch; and doing 50 sit-ups after morning coffee. The participants also logged onto a website each day, to report whether they'd performed the behaviour on the previous day, and to fill out a self-report measure of the behaviour's automaticity. Example items included 'I do it automatically', 'I do it without thinking' and 'I'd find it hard not to do'.

Of the 82 participants who saw the study through to the end, the most common pattern of habit formation was for early repetitions of the chosen behaviour to produce the largest increases in its automaticity. Over time, further increases in automaticity dwindled until a plateau was reached beyond which extra repetitions made no difference to the automaticity achieved.

The average time to reach maximum automaticity was 66 days, although this varied greatly between participants from 18 days to a predicted 254 days (assuming the still rising rate of change in automaticity at the study end were to be continued beyond the study's 84 days). This is much longer than most previous estimates of the time taken to acquire a new habit - for example a 1988 book claimed a behaviour is habitual once it's been performed at least twice a month, at least ten times. In fact, even after 84 days, about half of the current study participants had failed to achieve a high enough automaticity score for their new behaviour to be considered a habit.

Unsurprisingly perhaps, more complex behaviours were found to take longer to become habits. Participants who'd chosen an exercise behaviour took about one and a half times as long to reach their automaticity plateau compared with the participants who adopted new eating or drinking behaviours.

What about the effect of having a day off from the behaviour? Writing in 1890, William James said that a behaviour must be repeated without omission for it to become a habit. The new results found that a single missed day had little impact on later automaticity gains, either early in the study or later on, suggesting James may have overestimated the effect of a missed repetition. However, there was some evidence that too many missed repeats of the behaviour, even if spread out over time, had a cumulative effect, reducing the maximum automaticity level that was ultimately reached.

It seems the message of this research for those seeking to establish a new habit is to repeat the behaviour every day if you can, but don't worry excessively if you miss a day or two. Also be prepared for the long haul - remember the average time to reach peak automaticity was 66 days.

This research has a serious shortcoming, acknowledged by the researchers, which is that it depended entirely on participants' ability to report the automaticity of their own behaviour. Also, the amount of data made it hard to form clear conclusions about the need for consistency in building a habit. However, the study provides an exciting new approach for exploring habit formation and future research could easily remedy these shortcomings.

Not-do list – things we shouldn’t do.

We’ve all familiar with creating a to-do list to increase our productivity. Another list which can jumpstart our productivity is the not-do list – things we shouldn’t do. By being conscious of what to avoid, it’ll automatically channel our energy into things that we want to do. Doing both hand in hand will maximize our performance.

If you want to take your productivity to the next level, here are 9 habits avoid:
1. Trying to do everything

I mention 80/20 rule a lot in my articles because it’s true. And I’ll repeat again. Not all tasks are equal. Each task has its own importance. In fact by the 80/20 rule, 20% of the tasks on our to-do list account for 80% of the value. So cut ferociously at your to-do list and slice away the 80% low-value tasks. When you’ve streamlined it to the minimum essential, laser focus all your energy on those 20% high value ones. Do the same thing the next day. Rinse and repeat. Keep only the absolute important things and let go of the rest.

Read Strategy #6 on 13 Strategies To Jumpstart Your Productivity for more on the 80/20 rule.
2. Answering all emails (or calls and messages for that matter)

I used to think I have to reply to all emails until I noticed that not all my emails were replied to. In fact, many weren’t, even when they were follow-up replies to reader mails asking for help. Seemingly, all the effort that go into meticulously typing, wording and formatting my mails wasn’t really getting me anywhere. I would be stuck in email land the whole day long with no output to claim of my own except for an increase in mails in my sent box. So I began to selectively reply to higher priority emails , and the world didn’t stop. In fact, I now have more time to create more high value content and articles for readers, which is a big win for everyone.
3. Thinking you have to do everything immediately

Apart from my to-do list and not-do list, I also have a do-later list. This is to collect the items that drop in mid-way through the day, usually administrative, nitty gritty tasks that don’t take much time but aren’t majorly important too. If I drop what I’m doing at the moment to work on them it can be disruptive, so instead I put them in my do-later list. Then at the end of the day, I batch and process everything at one go. It’s a lot more effective.

Likewise for my emails, I have a “Reply by Tue/Thu/Sat” folder where I archived mails to deal with on the respective days.
4. Putting important tasks off

Procrastination is the mind killer. It may seem like a good idea to put off that task now, but that’s just setting yourself for a jam later on, and it’s not worth it. Get started on your most important projects now and stop putting them off. Out of all the people I’ve met in all my life, I’ve never come across anyone who gets authentic joy and happiness from procrastination. The ones who claim to be happy procrastinating are usually living in an illusion, alternating from “Oh I’m happy the way I am” to “I wish I don’t have to do this” to “Sigh I wish I started earlier” in a matter of seconds.

Don’t subject yourself to such a situation. It’s all about a matter of getting started. Once you start, it gets easier. I’ve written 11 simple, yet practical steps which can help you move out of the procrastination cycle.
5. Trying to get things perfect the first time round

Interesting, it’s the perfectionist in us that causes many of us to procrastinate (see #4). If the perfectionist side of you is hindering you from getting things done in the first place, that’s something you should look into. Get into the notion of ‘drafts’ – let yourself work on a 1st draft, where you work on the core content, then return for a 2nd or 3rd draft where you iron out the little details. Give yourself the permission to make mistakes which you can correct later on. It’s much easier this way than trying to get everything right in the 1st version. I do this when writing my articles and my books and my productivity is higher.
6. Being hung up over details

Being detail oriented is good. I’m a very detail oriented person myself. However, don’t be so obsessed with details that it holds you back. Does this matter a year from now? 3 years from now? 5 years? If not, then maybe it’s not worth worrying so much about it now. Go for the bigger picture; that’s more important to you.
7. Not having clear goals

Do you know your goals for this month? How about your goals for this year? And the next year? If you can answer these 3 questions with absolute certainty and conciseness, then you’re good to go. Otherwise, perhaps it’s good to spend some time to think over them. While it may take a bit of time in the beginning, after you work out your priorities, your days become very sharp and focused. I have clear monthly goals and targets which I work toward and review every week, and these help me to stay on track towards my long-term goals. This month, my biggest goal is to finish and release my 2nd book. Being conscious of this goal has helped me to push away the unimportant tasks and prioritize the ones essential for the launch, so I can meet the launch timing. Right now everything is going on track and I’m excited to see the final outcome. Read Strategy #1 of 13 Strategies To Jumpstart Your Productivity for more about setting your targets.
8. Not taking breaks

Humans are not robots. While robots can sustain constant output over a long period of time, we need to rest and recharge. So schedule a short break in between your work hours, say for 5 or 10 minutes, and take a breather. You’ll find your focus markedly higher when you return.
9. Trying to please everyone

I like this quote by Colin Powell, which says “Trying to get everyone to like you is a sign of mediocrity”. You’re never going to be able to control what others think, so don’t spend too much time sweating over it. Instead, work on the things you have control over – yourself, your emotions, your thoughts and your actions. Spend your energy in the creation process, and on people who do deserve your attention and love. Try it for a week – You’ll find it’s a lot more rewarding this way.

THOUGHT OF THE DAY

POWER OF USD

POWER OF PRACTICE

It is scientifically proven that within a state of calm, thoughts & thinking processes can be accessed much quicker. Your mind can be brought under perfect control by the regular practice of meditation.

* You WILL develop & increase your capacity to Focus.
* You WILL improve your Concentration.
* You WILL be able to make better Decisions.
* You WILL be able to make quicker Decisions.
* You WILL be able to make more rational Decisions.
* You WILL be more Alert.
* You WILL be more Observant.
APPLY MIND/METHOD /MONEY/

MONEY CYCLE(BE AT WINNER SIDE)

Small trader are Pre-programmed with the indicators by the speculators
Most of common indicators that the traders use are
1.Candle stick formations
2.Trend line
3.Volume Calculations
4.Support & resistance
5.2% rule or 3% rule
6.Rsi
7.Fibnocci
8.Pivot
9.Stochastic
10.Bollinger Band
11.MACD
12.Zig Zag
13. Momentum

In these Indicators Most of them Use candle stick with Volume Based analysis
Everyone Following Stoploss
Having a Knoweledge of break points using Support and resistance

while Following all these still traders fail to make money
In a Article its Said 60% of the people folowing News Channel for Buying or Selling stocks
25% of the people Doing their Own Analysis
10% subscribed By The Fund Mangers

60% people hanging on shortterm or longTerm hold their stocks with 5% risk a Month(News

Followers)
25% people 3% Risk a Week (own Analysing)
10% Subscribed by the Fund Managers Hanging For a Long term With THe Minimal Profit

The weired Story is 85% People are Trading Intraday


Will be continued

An article while browsing

How NOT To Make Money: Trading Stock Options
13 Unlucky Reasons Not To Trade Stock Options

1. 90% of option traders lose money
2. Nobody knows anything about successful options trading strategies
3. Trading options was the one activity at which I could not improve
4. Option purchases are "limited-risk"... but the limit is 100%!
5. Options lose time value from the moment you purchase them
6. Trading costs are high
7. Options are short-term and expire. You must trade often.
8. You trade in a thin market with little liquidity
9. Brokerage and trading floor fraud and abuse
10. Option prices are not formally tied to the price of the stock
11. Technical analysis does not work
12. Trading strategies and rules only work in hindsight
13. Perfection is required, but something always goes wrong

I would not recommend options trading to anyone

When I was getting started in options, if someone had told me what I am about to tell you, I wouldn't have believed them. "I'm a smart guy," I would have thought, "a fast learner, and when I study something, I get good at it. That will put me in the 10% of traders that make money."

1985 was when my two year, 12 hour a day, 7 days a week adventure began. I read books, subscribed to options quote, charting, and valuation services, studied the Black-Scholes option valuation formula, wrote computer programs (of course!) to do calculations, and joined CompuServe's Investor's Forum where amateur and professional traders exchanged ideas and discussed strategies. I made theoretical trades on paper, and, when it seemed like I might be getting the hang of it, started trading for real.

My goal was to either "become good at options trading OR prove to my own satisfaction that it cannot be done". In the heat of the action, and increasingly determined to become good at it, I forgot about the second part of the goal.

The 2 year effort was a difficult intellectual failure and a stinging financial one. I not only failed to become good at options trading; I completely failed to improve at it. I'd learned the jargon, was practiced at the mechanics of placing orders for different types of trades, and was knowledgeable enough to be comfortable discussing issues with other traders, but in fact I had not acquired any skills that made it possible to make a profit.

It took an act of will to quit trading. I wanted the opportunity to try to make my money back, but thought, "How will I feel at this time next year if I have, instead, lost twice as much?" The thought was sickening.

So I quit. It was supposed to be for a year, long enough to leave behind any temptation to "get even", long enough to break free from the addictive allure of the adrenaline-charged trading existence, and long enough to regain some objectivity with which to reflect upon my experiences. But the objective reflection brought discoveries that made my trading halt permanent.

Putting it all together, I remembered the second half of my original goal, "OR prove to my own satisfaction that it cannot be done". Over time, I concluded that it cannot be done.

Not merely that I couldn't do it, but that no one can. The rest of this article summarizes the evidence that pointed toward that conclusion. It is a personal view of the options markets, not intended as an academic reference. Some of the information, from 1987, is dated, but in a brief online review of the "situation" today in the option markets, it didn't look like the most important aspects have changed. If you believe any statement is in error, your comments are welcome.
1) 90% of option traders lose money

Even people who are highly knowledgeable about the financial markets and work in the industry do poorly. There is evidence all over the place that losing money in options is normal and "everyone in the know knows it".

I never got good at options trading, but I never encountered anyone else who was good at it, either. Some people admitted that they lost money overall, while others, although they spoke readily of their wins, were evasive about losses and totals. This was less surprising when I discovered, to my disappointment, that many of the people who traded options were also gamblers. They most likely viewed their options adventures as just another exciting form of gambling.

I've seen respected stock market analysts admit that they had been unable to profit from options trades and recommend staying away from them. Motley Fool, which has been around for years, has a web page that warns about options. Justin Mamis, an experienced professional trader, in his book, How to BuyAmazon.com, says, "We've rarely had any success in the options market."

I once asked my broker, at a large brokerage house, if she knew of any clients of theirs who consistently made money in options. She said, "A couple. Very few. Being in the business, I can't resist taking a flyer myself sometimes, but I've never done very well, either."

I subscribed briefly to the Value Line Options service. Their issues sometimes contained editorial statements that were remarkably lukewarm about their own service. They did not write enthusiastically or optimistically about options and seemed to doubt that their service would help anyone make money. My inference was that they published the service only because they saw a market demand for the statistics and could profit by providing them. I also subscribed to their Value Line Investment Survey, a fundamental analysis service on stocks. They never expressed similar reservations about their stock service, with, in my opinion, good reason.

The brokerage firms that I'm familiar with require that an account be specially approved for options trading. They require a minimum balance, and, to make sure you understand the risk of loss, they send you a risk disclosure document that is available as the Options Disclosure Document at http://www.optionsclearing.com/. If brokerage firms believed options to be a viable route to profits, why would they impose these requirements before allowing you to start trading?

Most people who continue trading options lose ALL the money they allocated, if they were smart enough to allocate an amount.
2) Nobody knows anything about successful options trading strategies

If you really found a winning strategy for trading stock options, would you publish a newsletter about it? Would you do television interviews? Would you create a website to tell everyone about it? No. You would sit at your desk all day trading options and not stop until you'd made however much money you wanted to.

There is an entire industry dedicated to promoting the notion that you can become a good trader, but the people in that multi-billion dollar industry are not doing that for themselves. Why not? Because they can't.

Investment newsletter writers, book authors, market analysts, TV show hosts, brokers, websites, and others make their money by perpetuating the myth that you can consistently beat the markets if only you learn enough. If any of these people knew how to make money in the markets, they'd be making their money that way. The very fact that they choose to do anything other than invest for themselves is proof positive that they haven't got anything worth listening to.

There are many areas of life where asking someone, "If you're so smart, why aren't you rich?" is not fair because success in that area may have nothing to do with making money. However, in the financial markets, the entire goal of which is to make money, this is the most fair and reasonable question that it is possible to ask. "If you're so smart, why aren't you rich?"

Every time you read a newsletter, every time you see a TV show, every time you visit a website telling you the latest great way to make money in the options market, ask them in your mind:

* "If this works so great, why aren't you doing it?"

* "If this works so great, why do you make your money writing this newsletter?"

* "If this works so great, why are you in this awful late night infomercial?"

* "If you're such a great trader, why do you manage other people's money but make your money from management fees?"

3) Trading options was the one activity at which I could not improve by studying or practicing

If I study hard and work at something, I get better at it. Two years of effort and study did not improve my results at trading options. When study and practice bring no payoff at all, it is a red flag indicator that the activity might be one at which it is not possible to improve. The possibility must at least be seriously considered.
4) Option purchases are a "limited-risk" speculation... but the limit is 100%!

The same is true of stocks, but you will almost never lose 100% on a stock.

The "limited risk" feature of options only distinguishes them from futures contracts, where you can lose much more than you invest.

Your loss in an option is limited to 100%, but you can lose 100% over and over again. To offset those losses, your gains, when they occur, must be very large. They can be, but they rarely are.
5) Options lose time value from the moment you purchase them

Your stock must not only move (assuming the option follows the stock, which it doesn't always do), but must move in time for your option to overcome its time-value loss since you bought it.
6) Trading costs are high

The combination of poor executions, wide bid/ask spread, and commissions can make even a successful options trade less profitable than it ought to have been.
a) Bid/Ask spreads are wide

Even when the executions don't go bad, the bid/ask spread is usually wide, which has the equivalent effect of a bad execution. If you buy an option for $0.75 and sell it immediately, it is quite common that you might receive only $0.50 for it, a loss of 33% plus your both-way commissions. [2007 note: with decimalization, bid/ask spreads might be somewhat less wide now than they were in the 1980's.]
b) Poor executions are frequent in options

Options markets lack liquidity, and specialists sometimes seem to take questionable liberties with the pricing of "at market" orders, and in one particularly bad case, my order was simply overlooked:

I owned options on which there was a Good Till Canceled limit sell order. During one day, the option price spiked well above my sell limit, then plunged back to near zero, but never during that time was my sell executed. I obtained written proof of the price history during the day and presented it to my broker. They credited me with the sale at my limit price, but I suspected it was partly because I was an active trader and they wanted to keep a customer.

One can hope that better computerization of the markets (and better oversight of specialist activities) has made bad executions less frequent, but there remain some situations where if an execution goes bad or you are unable to get your trade executed due to factors on the trading floor, you are just out of luck. (See the OCC Options Disclosure Document.)
c) Commissions on option transactions are high

Your options must make a significant move in the right direction just to overcome your commission costs.

1987 brokerage commissions were about 3 times today's rates, so it was a more important factor then. Nonetheless, if you trade on paper to discover if you will be good at options trading, always calculate and include the actual commission costs that would be charged.
7) Options are short-term, and they expire

You are forced to trade often. You cannot simply buy and hold. If you want to stay in the market, you must replace expired options with new ones, incurring repeated commission expenses.

You cannot use a long term strategy to wait out setbacks. If a stock makes a big move against you, your chances of it recovering before expiration are small.
8) You usually trade in a thin market with little liquidity

Most options are traded so thinly that you are trading against the specialist because there is no one else available to take the other side of your trade.

The specialist has instant access to news about the underlying stock, firsthand knowledge from moment to moment about the supply and demand for the stock and the option, and is on the trading floor assimilating all this information, and is setting the prices that you pay and receive accordingly. Trading against someone in this position is risky.
9) Brokerage and trading floor fraud and abuse

There are (or used to be) few safeguards to protect an individual trader against fraud and abuse in the options trading system. It's a jungle out there, and you're not a very big animal. Regulatory oversight of the financial markets has never been very good. If you read the news, you know that all too well.

Consider this in light of Section 6b above: "Poor executions are frequent in options".
10) Option prices are not formally related to the price of the underlying stock

From the emphasis that is so often placed on formulas that supposedly calculate the "value" of an option, you would think that there must be a formal relationship between the price of a stock and the price of an option on it, but there is not.

Like everything else, the value of an option is whatever someone is willing to pay for it at a particular point in time. If it's hot, it's hot, if it's not, it's not, and an underlying stock and the options on it don't always fall into and out of favor at the same time. Option prices move independently of the price of the underlying stock, and sometimes track the stock surprisingly poorly.

An option valuation calculation might say that an option is undervalued or overvalued, but there is usually a reason. If a company is going into bankruptcy, are you really going to buy call options on the stock just because the Black-Scholes equation says they're undervalued? Of course not! They're undervalued for a good reason. The Black-Scholes equation deliberately omits factors such as this because they are not quantifiable. In this case, though, the bankruptcy is the most important piece of information to know about the company, so the Black-Scholes calculation is utterly worthless even as a guide.

Option prices reflect the expectations of options traders about what the stock is going to do. As soon as a "technical move" looks likely, the options will often move in anticipation of it, to the point that they would be worth after the move has already occurred. If the move doesn't happen, the options drop. If the move does happen, often the option has already made its move, and won't budge any further. If you wait for a signal, others (like the specialist or floor traders) will get there first. If you anticipate a signal, you're going on "nothing".

One of the peculiar ideas I once had was that the only time to buy an option was when it looked as though no signal at all was likely anytime soon. I never followed up on this with any study, but that would be the only time that an option had anywhere near its fair value: when almost no one has any interest in it one way or the other. On the downside, that makes your purchases basically random.

The real fair value of an option is probably its market value.
11) Technical analysis does not work

Many options traders use technical analysis to try to predict price movements, but if there were any value in the chart "patterns" of TA, they would by now be rigorously (operationally) defined so people could agree on the definitions, and there would be numerous studies showing that it works.

When an invention of this type enters the marketplace of ideas and shows legitimate promise, it gets examined by the academic community rapidly, thoroughly, and in detail. After all, these types of discoveries can win Nobel prizes and/or billions of dollars. Charting would not still be a "black art" at this late date if it had any validity.

Studying my Edwards and Magee "technical analysis bible" did not help my trading.

Fundamental analysis, on the other hand, might not be worthless in principle, but it's not much use in option trading because its outlook is long term, and the maximum life of an option is only 9 months.

So what type of analysis does help in option trading? Nothing helps.
But why do some people appear to succeed?

a) If 100 people predict a series of 100 coin tosses, a few of those people's guesses will happen to coincide better than others with the actual results, making them look like geniuses for a while. Whenever a person (or money fund) "excels" in this manner, they make a big deal about it, while noting in the fine print, "Past performance is no guarantee of future results." Nice understatement. Past performance is not even an indicator of future results, much less a guarantee.

b) "Success" depends on the time period chosen for reporting. The most informative time period (rarely reported) is "from the day you began trading right up until today", no omissions allowed.
12) Trading strategies are arbitrary, contradictory, and only work in retrospect

There are many trading rules such as "Cut your losses, but let your profits run", or "Sell after any 5% retreat", "Always use limit orders", etc. They all sound like good strategies, and they all are good strategies in one situation or another. Unfortunately, you don't know ahead of time which strategy will look good in hindsight, and they are all so vague and contradictory that they have no use except in hindsight. You might just as well complain, "Oh why didn't I buy low and sell high like I knew I should?" because most trading rules are of little more use than that one. They are fine for looking back, but they don't help going forward.

After a bad trade, you can always go back and see where you went wrong, discovering how some particular strategy would have saved you, but the same strategy that would have saved you this time would kill you another time, so what use is it?
13) In options, perfection is required, but something always goes wrong

You must correctly predict the stock's move and the time during which it will make that move. You must buy the option at the price your calculations are based on. Then you must sell at the right time, in the right way, having chosen the right method (stop-loss, limit order, or market order at time of sale), and your order must be executed rapidly and correctly by your broker and the options exchange. In too many option trades, some part of it goes wrong.
Conclusion

I am not saying that you cannot make a killing in options. You can. But it's extremely unlikely, and if it does happen, it's not because you are "good at it".

To some this will sound like a sour grapes story, but I know that there is a difference between an activity that I cannot become good at and one that no one can become good at.

Let's compare forms of gambling as a somewhat appropriate analogy. I do not like gambling, and if I thought that's all that options trading was, I never would have had any interest in it.

There are games like poker that require skill and that it is possible to become good at. Newcomers usually lose, but their results improve as they gain experience. I would be a bad poker player because I don't have the skills. However, experienced and consistently successful poker players do exist.

On the other hand, there are slot machines, state lotteries, and roulette. They require no skill, do not reward skill, and are mathematically impossible to become good at. I would be bad at those games not because I am unskilled, but because no one can be good at them. It's in the nature of the activity.

My conclusion about options is that because of the factors described above, I cannot become good at it, and neither can anyone else. It's in the nature of the activity.

I've heard options strategists say that the key is not to be in the market all the time, but to trade seldom, picking your positions carefully. It's true, this works to improve your results. If you only put a quarter in a slot machine once a year, it will limit your losses to $0.25 a year.

An activity that is inherently profitable should bring greater return the more you do it. If your results get better when you do it less, it is an indication that the average return is negative. If the average return is negative, you should never put the quarter in at all. Then you lose nothing.

DONT CONFUSE WITH ALL THE MOVEMENT JUST HAVE LOOK TO PICK

“We know that the random element in the market represents at least 40 to 60 percent activity. Therefore, it’s not logical to look at every tick or to think that every tick or every chart formation has meaning. They don’t. There are too many traders trying to look at the markets from too stringent an analytical viewpoint. Most of what happens in the markets is meaningless. Why try to interpret every little movement, every little reversal, every little tick? In trying to do too much, they’re actually paying too much attention to the market. You have to keep a distance from the market. Only then will you have the psychological resources to let your profits ride. You won’t be looking at every tick and interpreting it in a fearful way

NIKKEI DANCE ON OUR TUNE

WE WROTE ABOUT NIKKEI YESTERDAY IN OUR NEWSLETTER

POWERVISION

# Think for myself
# Stay focused on the reasons why I bought a stock and sell when those reasons are no longer compelling
# Don’t let successful trades turn into losses
# Be ruled less by emotion and fear and more by logic and knowledge
# Read some good books on trading
# To avoid being whipsawed, I will give myself more room for the trade to work
# Follow my own rules
# Be easier on myself when I screw up and don’t let my ego inflate when I’m right
# Don’t force trades – there will always be another opportunity
# Honor thy stops!
# Stop chasing hot and popular stocks
# Do my own research
# Keep learning
# Learn to be less nervous and take more risks
# Remember that lost opportunity is better than lost capital
# Trade less – don’t overtrade
# To try and limit the number of opinions I allow to affect my trading. Paralysis by analysis has hurt me
# Avoid any trade where I use the word “hope” in my reasoning process
# To follow my logical, well-conceived, long-term game plan, without making irrational changes due to short-term market conditions
# Tune out the daily noise and useless banter
# Reduce the number of positions currently held
# Have more faith in my own abilities
# In trading, learn to be fearless
# Don’t be too greedy
# Slow down!
# Incorporate the use of smart trailing stops
# Use ETFs to properly diversify
# Remove my ego from my trading decisions
# Avoid getting easily frustrated or impatient
# Control and limit my losses
# Focus on making the next trade, instead of the last one
# I will not average down into losing positions
# Create more careful and detailed records with a commitment to review them regularly
# Learn to incorporate a systematic screening method like you
# Use emotions (both personal and market) to my own advantage
# Know my exits before making any trade
# Don’t be swayed by the latest and greatest strategy I hear about
# Keep it simple. Complex strategies are no better
# Avoid crowded trades
# Take time to look for reasons NOT to buy
# Let profits run longer. take losses quicker
# Trade what I see, not what I want to see
# Be more proactive and react faster to situations I find
# Make bigger, but less frequent trades
# Stay patient
# Focus on value of companies and not on the temporary market emotions
# Be more nimble
# Keep better notes
# Adopt an opportunistic versus a rigid bull or bear bias toward the market
# Enjoy the game more
# To quit counting the value of my account on a daily basis
# Stop looking for the holy grail
# Figure out what trade related information to consume on a daily basis and keep what is useful and leave out that which is not
# Avoid information overload by limiting what I read
# Don’t read stock blogs
# Turn off the TV and dedicate more of my time to become a better trader
# Set up a lazy portfolio
# Focus on proper asset allocation
# Never forget that “when you are through learning you are through”
# Recognize mistakes early, exit, and move on
# Take partial profits routinely, but keep money on high-performing stocks
# Follow my system
# To screen & scan my watchlist in a consistent manner each and every time
# Take routine breaks away from the market to refresh and gain more perspective
# Add more fundamental research to my technical research
# Concentrate on finding just one really good idea per year like Warren Buffett
# Stop searching for shortcuts or quick fixes – take baby steps
# Read at least 3 more trading books in next 3 months
# Focus, focus, focus – ignore all outside distractions
# When a strategy works, have the courage to follow it through, when it does not work, to have the wisdom to stop trading
# Find and exploit long-range sector themes
# Open my ears and keep my mouth shut
# Never panic
# Be humble

FOR ALL

SHORT AMBUJACEMENT FUTURE 140.50 -142 SL 145 TGT 137 -135

SHORT ALLBK 242-244 HOLD WITH THE STOPLOSS OF 246 TGT 238-236

NEWSLETTER FOR TOMORROW

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Breaking Up Is Hard to Do

What happens to investors when they are racked with regret? Most people don't panic; instead, they freeze. To understand that paralysis, consider this example:
Paul owns shares in Company A. During the past year he considered switching to stock in Company B, but he decided against it. He now finds that he would have been better off by $2,500 if he had switched to the stock of Company B.
George owned shares in Company B. During the past year he switched to stock in Company A. He now finds that he would have been better off by $2,500 if he had kept his stock in Company B.
Who feels worse? In surveys, an overwhelming 92% of people say George feels more regret than Paul. Almost everyone shares the same powerful intuition: In the here and now, a mistake that stems from an action hurts worse than a mistake that results from inaction. "You were at the secure trunk of the tree," says psychologist Thomas Gilovich of Cornell University, "and then you went out on a limb, and when it gives way you feel like a fool because you didn't need to go out on that limb." And that's why errors so often paralyze investors. After you screw up once, you become afraid of taking another action that could make things even worse. And the only thing worse than losing is having to admit that you're a loser. So, while most investors are only too eager to cash in on their gains, they hate to sell an investment when it's down, since selling turns a "paper loss" into a real one.

USA trade balance

Preparation

There’s only one way to trade at the end of the day, not for recreation or thrill seeking, but with the business intent of running a successful business.

* Passion to participate in highly competitive environment, with uneven playing field
* Adequacy of capital
* Information gathering (technical)
* Market analysis (markets, sectors, stocks)
* Development of strategies (the edge)
* Cost control (trading costs)
* Ability to employ strategies that match risk tolerance
* Day-to-day preparation
* Trade entry, monitoring, and exit with discipline
* Monitoring progress
* Ongoing professional education and learning

Here is what traders choose to worry about (among others I am sure). These so-called worries are usually in the form of a question and revolve around losing money:

1. Will this trade make money?

2. Will this trade hit a profit target?

3. Will this trade reverse quickly against me?

4. Will my gain turn into a loss?

5. Will unknown news affect my trade?

6. What if I have not done enough homework?

7. What if my strategy is not sound?

8. Will Cramer disagree (I had to throw this one in)?

9. What if I get out too soon?

10. Did I buy the right stock?

11. What if I miss a potential move?

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NIFTY PUT 6200 BUY CALL GIVEN @ 54-58 SL 40 TGT 70,80,100

INVEST WITHIN YOU

Knowledge – A trader must put in the time and effort to study and learn the proper skills in order to be successful. Whether that is through technical or fundamental analysis, one must invest in their education. They must completely understand their market, and its ideal as a beginner to focus on one market and be a specialist. A part of the knowledge and education is devising a game plan or strategy for trading. Writing down your rules and sticking to your trading plan is a key to success.

Controlling your emotions – The ability to control your fear and greed is paramount to success. A successful trader will have a balanced emotional state regardless if he/she is winning or losing. Ensuring the trader has a clear head and is able to pull the trigger and take trades every time an opportunity presents itself.

Patience – A successful trader can sit on the sidelines for days waiting for the proper setup. They don’t jump into a trade just for the sake of trading. Yes there may be opportunities, but the smart trader waits for trades that meet their trading rules and system. Over trading by beginner traders is a big obstacle to overcome. A need to always be in the market will lead to taking trades that are likely too risky. Learn patience, it’s a key to success. A winning trader usually has an extraordinary amount of self control, and often the best trade is no trade.

Discipline – There are no 100% winning traders and taking losses are part of the trading profession. It is about finding high probability opportunities and managing the risks on each trade. A trader must stick to their trading plan and discipline is the key to success.

Confidence – Having the confidence in yourself and your system to make your profit or take a loss when your method tells you to is a winning trait. Confidence usually comes from experience and knowledge.

Scary Facts About the U.S. Economy

#1 Ten years ago, the United States was ranked number one in average wealth per adult. In 2010, the United States has fallen to seventh.

#2 The United States once had the highest proportion of young adults with post-secondary degrees in the world. Today, the U.S. has fallen to 12th.

#3 In the 2009 “prosperity index” published by the Legatum Institute, the United States was ranked as just the ninth most prosperous country in the world. That was down five places from 2008.

#4 In 2001, the United States ranked fourth in the world in per capita broadband Internet use. Today it ranks 15th.

#5 The economy of India is projected to become larger than the U.S. economy by the year 2050.

#6 One prominent economist now says that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

#7 According to a new study conducted by Thompson Reuters, China could become the global leader in patent filings by next year.

#8 The United States has lost approximately 42,400 factories since 2001. Approximately 75 percent of those factories employed at least 500 workers while they were still in operation.

#9 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

#10 Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.

#11 In 1959, manufacturing represented 28 percent of all U.S. economic output. In 2008, it represented only 11.5 percent.

#12 The television manufacturing industry began in the United States. So how many televisions are manufactured in the United States today? According to Princeton University economist Alan S. Blinder, the grand total is zero.

#13 As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time that less than 12 million Americans were employed in manufacturing was in 1941.

#14 Back in 1980, the United States imported approximately 37 percent of the oil that we use. Now we import nearly 60 percent of the oil that we use.

#15 The U.S. trade deficit is running about 40 or 50 billion dollars a month in 2010. That means that by the end of the year approximately half a trillion dollars (or more) will have left the United States for good.

#16 Between 2000 and 2009, America’s trade deficit with China increased nearly 300 percent.

#17 Today, the United States spends approximately $3.90 on Chinese goods for every $1 that China spends on goods from the United States.

#18 According to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.

#19 American 15-year-olds do not even rank in the top half of all advanced nations when it comes to math or science literacy.

#20 Median household income in the U.S. declined from $51,726 in 2008 to $50,221 in 2009. That was the second yearly decline in a row.

#21 The United States has the third worst poverty rate among the advanced nations tracked by the Organization for Economic Cooperation and Development.

#22 Since the Federal Reserve was created in 1913, the U.S. dollar has lost over 95 percent of its purchasing power.

#23 U.S. government spending as a percentage of GDP is now up to approximately 36 percent.

#24 The Congressional Budget Office is projecting that U.S. government public debt will hit 716 percent of GDP by the year 2080.

INTELIGENCE OF REVERSE ACT

One day, a man walked into the produce section of his local supermarket and asked to buy half a head of lettuce. The boy working in that department told him that they only sold whole heads of lettuce. The man was insistent that the boy asks his manager about the matter.

Walking into the back room, the boy said to his manager, "Some jerk but there wants to buy only half a head of lettuce." As he finished his sentence, he turned to find the man standing right behind him, so he added, "and this gentleman wants to buy the other half."

U.S. import prices fall more-than-expected in September

U.S. import prices fell more-than-expected in September, official data showed on Wednesday.

In a report, the U.S. Bureau of Labor Statistics said U.S. import prices fell by 0.3% in September, after rising by 0.6% in August.

Analysts had expected U.S. import prices to decline by 0.1% in September.

The report said that year-on-year, U.S. import prices rose less-than-expected, increasing by 3.5% in September, after rising by 4.0% in August.

Analysts had expected year-on-year U.S. import prices to rise by 3.8% in September.

According to the data, U.S. import prices fell as a big drop in petroleum prices offset gains in food and other non-fuel goods.

Following the release, the U.S. dollar was down against the euro, with EUR/USD gaining 0.28% to hit 1.3964.

Meanwhile, the outlook for U.S. equity markets was upbeat: Dow Jones Industrial Average futures indicated a gain of 0.63%, S&P 500 futures pointed to an increase of 0.71%, while the Nasdaq 100 futures indicated a rise of 0.67%.

Manipulative techniques are designed to mess up your mind

The world can be an extremely nasty place at times when you fall into manipulative traps set by people around you. Manipulative techniques are designed to mess up your mind and make you do things according to some other person's will. They range from the very subtle to the downright arm wrenching ones. In this article I provide an insight into human psychology and list out the emotional manipulation techniques that are employed by people to have their way in personal and business relationships.

Psychological Manipulation Techniques
I personally would love to believe that the world is a beautiful place with people who can all be trusted and loved. I would like to see the best in every person and embrace him as he is, but reality has forced me to reconsider my approach. I understand that selfishness is a natural human trait and I personally don't claim to be a saint, but a look at the depths of treachery, manipulation and deceit that people are capable has forced me to change my mind about dealing with people. I am not pushing you into paranoia, but you need to be careful in your dealing with people who can take you for a ride for their selfish interests. Here are the subtle and not-so-subtle emotional manipulation techniques that one needs to watch out for.

Web of Lies
This is one of the perennial manipulation techniques of the con artists. They create a web of lies laid around so thick, that it warps reality for you and makes you fall victim to his manipulation. The only way of saving yourself is to check for inconsistencies and recognizing bluff. Be slow in trusting is my rule!

Taking Advantage Of Your Emotional Investment
This is the worst kind of manipulation that anybody could be subjected to. Many are forced into doing something that they would never do, as the thing that they are emotionally invested in, is threatened. People with psychopathic tendencies tend to do this with other people. The way to save yourself in such a situation is preventing it from occurring. Do not be too vocal about what your emotional investments are to strangers. Don't expose your weaknesses unnecessarily. There may be people around bent on taking advantage of it.

Challenging Your Ego Through Provocation & Contempt
One of the greatest manipulation techniques in politics, sports and just about every field of human endeavor is provocation and contempt. A man is forced into doing something silly through provocation, contempt or public humiliation. A hurt ego can be a dangerous thing which can be easily manipulated. When you are provoked in such a way to do something stupid, think about whether it is really worth it. It is easy to let your hurt ego drive you mad. Wait and pause it all, think it out before doing something silly.

Blinding Out of Logic Through Temptations
The age old nemesis that forces people into ruining their life is momentary temptation and greed. When you like something to the point where you are addicted to it, it becomes your weakness. Be wary of temptations as they are manipulative traps waiting to be sprung on you.

Plain Old Brainwashing
This is one of the manipulation tactics used by marketing or advertising companies, as well as fundamentalists. You repeat and repeat a thing so many times in front of a person or a mass of people, that it overrides their reasoning. The only way to save yourself from such manipulative people is to pass things that you listen to, through a filter of reason. Don't accept things because somebody said them. Verify and investigate on your own before believing.

Subtle Emotional Blackmail
Subtle emotional violence is often inflicted in relationships. This is one of the manipulation techniques in relationships that often goes unnoticed. You care about a person and he uses your feelings about him as leverage to have his/her way. This often happens in relationships and can only continue till the victim between the two decides that he or she has had enough.

Deprivation
Deprivation is another class of emotional manipulation techniques that forces people to do things against their will. This kind of manipulative psychology is rampant in family and social life. Deprivation is used to force a person into compliance. This one is a really tough one to beat!

Caressing the Ego
One of the most rampant emotional manipulation techniques that can tear relationships apart is the ego caressing. You are fed lies and your ego is caressed until it is so big that the manipulator can turn you into a puppet anytime. This one can only be avoided by down right humility and being a fair judge of people!

So these were the machinations and emotional manipulative behaviors that one needs to watch out for. Manipulation techniques can be used in a positive way too. People may be manipulated to do good things and make better choices, but it is a risky game to play.

It is very important to maintain your independent opinion of things and make your own judgment to save yourself from falling victim to these mind manipulation techniques. In other words, do not let somebody else think for you but think yourself! Try not to let anger, lust, greed and lies cloud your logic. That is quite a tight rope to walk but the trick is to listen to everybody, talk to a few and trust fewer. Discretion, patience and good judgment will help you to avoid the manipulative traps set around you.

MISTAKES

# Don’t over-leverage yourself or have all of your money tied into one position. Keeping cash on hand is okay as a trader. These days brokers are offering extremely competitive margin requirements for day trading futures, but low margins can be a wolf in sheep’s clothing.
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# Don’t trade to trade. Understand that there are 3 positions you can take as a trader: a long position, a short position and a position to NOT be in a position. There will be plenty of trading opportunities that will come along. Don’t give money to the markets simply because you are bored!
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# Avoid trading a strategy without having a good understanding of how the strategy works. What is the typical winning percentage? What is the largest drawdown? In general, high winning percentage strategies have smaller average profits per trade. Lower winning percentage strategies might not have as many winners, but when you are a winner, you typically win big. If you expect your strategy to bring big profits without losses, you can also expect a check made out to “REALITY” to come your way any day.
#

# The market will always go higher and it will always go lower. Don’t try to pick tops and bottoms on a hunch. This is where most new traders get burned.

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Currency Wars !

False Beliefs About Trading the Markets

1) What goes up must come down and vice versa.

That’s Newton’s law, not the law of trading. And even if the market does eventully self-correct, you have no idea when it will happen. In short, there’s no point blowing up your account fighthing the tape.

2) You have to be smart to make money.

No, what you have to be is disciplined. If you want to be smart, write a book or teach at a university. If you want to make money, listen to what the market is telling you and trade to make money — not to be “right.”

3) Making money is hard.

Nope. Sorry. Making money is actually easy. Statistically, you’re going to do it about half the time. Keeping it, now that’s the hard part.

4) I have to have a high winning percentage to be profitable.

Not true. How often you are right on a trade is only half of the equation. The other half is how much do you make when you’re right and how much you lose when you’re wrong. You can remember that with this formula:

Probability (odds of it going up or down) x Magnitude (how much it goes up or down) = Profitability

5) To be successful, I have to trade without emotions.

That is both wrong and impossible. You are human so you have emotions. Emotions can be a powerful motivator to your trading.

When you feel angry or scared in trading, take that emotion and translate it into something more productive. For example, if you’re feeling angry because you just got run over by the market, view that anger as a reason to be more focused and disciplined in your entry and exit levels on the next trade.

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Retail Sales ex-auto

The United States has been living a lie.

As a nation, we have been kidding ourselves, repeating myths, hoping that if we say something enough times, it will become reality — no matter how untrue. The credit crisis and now foreclosure debacle has revealed to anyone who cares to look what we have sought to ignore: That the past decade has been based on a set of fundamental beliefs that are intrinsically false.

Its time for an intervention. We need someone to force us to stop hitting the bottle, lose the bimbo, skip the dessert cart, visit the gym. Its time to stop bullshitting ourselves about Financial Engineering, and face both the Truth & Consequences of our legacy financial system.

It is past time we recognize these hard truths:

1) There is no free lunch: The very first rule of economics has been forgotten time and again. Everything has a cost, and that cost is commensurate with value received. This includes making loans to unqualified borrowers to propping up home prices. Banks, regulators and policy makers have to start thinking in terms of collateral costs of free lunches to unintended consequences.

2) Financial Engineering is Not Alchemy: Just as you cannot convert lead to gold, neither can you convert high risk to low risk through a wave save of the spreadsheet. Ongoing attempts at eliminating risk — repackaging, syndicating and securitizing it — have been revealed as misleading nonsense. The risk involved in any directional bet cannot be removed by slicing and dicing and merely selling off various tranches. During crises, all asset classes seem to correlate anyway.

Whether its Greek bonds or Alabama’s sewer financing, changing numbers on a spreadsheet does not magically transform losses into gains, change debt to income ratios, or create wealth. All this does is temporarily mask the actual underlying financial condition of the engineered entity. Merely moving pieces of paper around has time and again been revealed as a scam; why people fall for it over and over reveals a collective failure of memory.

3) Bank Hedging Undermines Lending: At one point in time, banks’ had a collective expertise in evaluating the credit worthiness of borrowers. Whether it was revolving credit, auto loans, mortgages, or small business loans — they knew how to evaluate the likelihood of repayment or default.

In a mad grab for market share and profits, the larger lending institutions experimented with replacing their own experience and business judgment with complex hedging models.

Thus, credit risk of any borrower became far less significant, since it was to be hedged. As the financial sector became less dependent upon their own decision making, credit quality slid towards worthless. Hedging removed the banks’ incentive to quality-of-loans, and replaced it with the motivation of quantity-of-loans. Sliding all the way down the quality scale in credit ALWAYS end badly.

4) The Rule of Law is Sacrosanct: Our system of private property has developed due to the rule of law. The ability to demonstrate ownership, pass clear title, resolve disputes has worked for 100s of years. The recent frauds we have seen from law firms, process servers, bank legal departments, even drive through RE courts has put the nation at risk of becoming a lawless banana republic.

There is only one solution to this threat: For the rule of law to be in force, those people who violate it — previously known as “criminals” — must suffer the painful consequence of their illegal actions.

If you falsified documents that where used in foreclosures, you must be prosecuted for criminal fraud. If your firm’s primary purpose was this illegal activity, it must be put down. This means loss of professional licenses, corporate death penalties and jail time for offender . There is no deterrent to criminality of there are no significant penalties.

5) Campaign Finance Reform: The hijacking of the American financial system was done legally. Over the past 3 decades, the regulatory apparatus was Jiu Jitsued so that rules were made for the benefit of the financial sector — not the public. Thanks to a series of Supreme Court decisions, the corporate takeover of first Congress, then the election process, is now complete.

The only way to reverse this is a national campaign to pass a Campaign Finance reform law — preferably, a Constitutional Amendment — that gets the dirty money out of politics. Full disclosure of all donors, no hidden advantages for corporate cash, public financing of Congressional elections needs to be written into the constitution.

No one likes to face the hard ugly truths about themselves. As a nation, we need an intervention — our closest friends need to sit us down and slap us across the face. The sooner we stop kidding ourselves, the sooner we can move forward with more productive honest economic lives . . .

Trade to win

“If a betting game among a certain number of participants is played long enough, eventually one player will have all the money. If there is any skill involved, it will accelerate the process of concentrating all the stakes in a few hands. Something like this happens in the market. There is a persistent overall tendency for equity to flow from the many to the few. In the long run, the majority loses. The implication for the trader is that to win you have to act like the minority. If you bring normal human habits and tendencies to trading, you’ll gravitate toward the majority and inevitably lose.”