by daytrader01 on August 8, 2010
Excerpt by Van K. Tharp, Ph.D.
So let’s look at the psychology of trading from the angle of mistakes. When you don’t follow your rules, you make a mistake. It’s that simple. And making the same mistake repeatedly is called self-sabotage.
First, let me introduce one way to measure mistakes’ impact on your trading. Trader efficiency is a measure of how effective a trader is in making mistake free trades. So a person who makes five mistakes in 100 trades is 95% efficient. In the last five years I’ve requested that my Super Traders document their mistakes so that we can look at their efficiency levels. I have found that 95% is actually a very good trading efficiency level; many traders can’t even trade at 75% efficiency—which is terrible. That’s one mistake in about every four trades. This is most important for one category of traders: rule-based discretionary traders. In my opinion, when rule based discretionary traders become efficient, they are by far the best type of trader. [click to continue…]
by daytrader01 on July 23, 2010
by daytrader01 on July 18, 2010
The aggregate trading stimulants/activity of large players create short-term patterns in stock price behavior, suggests a study entitled “Are You Trading Predictably?”. The Authors calculate returns over 13 half-hour intervals each day using intraday bid and ask prices for 4,494 U.S. stocks over the period of January 2001 through December 2009.
[click to continue…]
by daytrader01 on July 16, 2010
Trading patterns across the NSE and the BSE have changed as the proportion of options trading in the daily turnover on the exchanges has increased.
“Volumes of brokerage generated are generally flat with a slight upward bias. During the last financial year, daily options turnover constituted 37 per cent of the total turnover. This has increased to 50 per cent in the first two months of this financial year,” said Mr Himanshu Kaji, CFO and Group COO, Edelweiss Capital.
Mr Vinay Agrawal, Executive Director, equities broking at retail focussed brokerage Angel Broking, said: “The share of options turnover has steadily increased from 10 per cent to 55 per cent and this cannot be due to institutional turnover alone. The retail segment has also clocked consistently significant growth.”
Source: Hindu Business Line
So let’s look at the psychology of trading from the angle of mistakes. When you don’t follow your rules, you make a mistake. It’s that simple. And making the same mistake repeatedly is called self-sabotage.
