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It is a 7 minute podcast discussing the concept of Anchoring.
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Saturday, August 3, 2013
Friday, May 24, 2013
The Psychology of Wins and Losses
Studies have shown that people who have a string of wins in a gambling scenario typically go onto suffer from other negative psychological biases such as the self attribution bias and the overconfidence bias. The same studies have shown that people who have a string of losses in a gambling scenario typically go on to accept lower pay-offs than they had orginally hoped for because they become risk averse.
In other words, to put it into a trading context, if you have a string of profitable trades in the market you are likely to become overconfident and we know that overconfident traders commit all sorts of negative judgements which adversely affect their portfolios. We also know that if you suffer a string of losses in the market you are likely to become risk averse which leads you to NOT let your profits run, but instead, take regular small profits which makes it very difficult to build up your trading capital over the long run.
Attached is a PDF article discussing the psychology of wins and losses.
CLICK HERE TO DOWNLOAD PDF ARTICLE
This book has been reviewed by Daryl Guppy and Alan Hull.
ABOUT THE BOOK, Daryl says:
"I think he (PAUL) has got some useful and interesting things to say. Thisisnew material and a good guide for new and existing traders."
ABOUT THE BOOK, Alan says:
"Hi Paul, just finished reading your book and I believe it to be a well written book with some very worthwhile insights - its engaging, anecdotal and reflects the fact that you are obviously well read yourself and an experienced trader/investor. I would recommend it to my students but I would place the caveat on it that it requires a degree of prerequisite knowledge and market experience."
Thanks Daryl and Alan.
In other words, to put it into a trading context, if you have a string of profitable trades in the market you are likely to become overconfident and we know that overconfident traders commit all sorts of negative judgements which adversely affect their portfolios. We also know that if you suffer a string of losses in the market you are likely to become risk averse which leads you to NOT let your profits run, but instead, take regular small profits which makes it very difficult to build up your trading capital over the long run.
Attached is a PDF article discussing the psychology of wins and losses.
CLICK HERE TO DOWNLOAD PDF ARTICLE
This book has been reviewed by Daryl Guppy and Alan Hull.
ABOUT THE BOOK, Daryl says:
"I think he (PAUL) has got some useful and interesting things to say. Thisisnew material and a good guide for new and existing traders."
ABOUT THE BOOK, Alan says:
"Hi Paul, just finished reading your book and I believe it to be a well written book with some very worthwhile insights - its engaging, anecdotal and reflects the fact that you are obviously well read yourself and an experienced trader/investor. I would recommend it to my students but I would place the caveat on it that it requires a degree of prerequisite knowledge and market experience."
Thanks Daryl and Alan.
Tuesday, May 21, 2013
Anxiety and arousal and the trader
Anxiety and arousal causes traders and investors to have knee jerk reactions in the market. A lack of emotional arousal can also cause traders and investors to be slow in reacting to stop loss signals and entry signals. The attached PDF article discusses this.
This article is based on a small section in one of the chapters of the book THE MENTAL TRADER. To read a sample chapter click here.
To buy it click here.
DOWNLOAD ARTICLE HERE
Visit us online for more trading resources, trading books and free articles.
This article is based on a small section in one of the chapters of the book THE MENTAL TRADER. To read a sample chapter click here.
To buy it click here.
DOWNLOAD ARTICLE HERE
Visit us online for more trading resources, trading books and free articles.
Sunday, May 19, 2013
Introducing our podcasts
For those new to our blog, we would like to draw your attention to our new educational podcast series on elements in trading psychology.
Podcast Powered By Podbean
Podcast Powered By Podbean
Friday, May 17, 2013
Beware of being sucked into a downtrend
A lot of research has been done around crowd compliance. Compliance in the stock market can lead to losses. The attached artile that accompanies this blog post briefly looks at just this very thing.
People have been sucked into a downtrend in UGL on the ASX for example, since April 2011. Another great example is OZL on the ASX. We called a downside target in that stock of $3 way back when the stock was $6 (we did this in an old issue of our old Technical Report Newsletter. This newsletter has now been replaced with a free fortnightly newsletter from our sister blog).
Other stocks such as AGO which have recently tried to breakout of the downtrend, seem to have failed according to the technical indicators we use. Therefore we can imagine many people holding onto AGO stock as it collapses below 80 cents in the weeks ahead.
Please download the article here.
People have been sucked into a downtrend in UGL on the ASX for example, since April 2011. Another great example is OZL on the ASX. We called a downside target in that stock of $3 way back when the stock was $6 (we did this in an old issue of our old Technical Report Newsletter. This newsletter has now been replaced with a free fortnightly newsletter from our sister blog).
Other stocks such as AGO which have recently tried to breakout of the downtrend, seem to have failed according to the technical indicators we use. Therefore we can imagine many people holding onto AGO stock as it collapses below 80 cents in the weeks ahead.
Please download the article here.
Friday, May 10, 2013
The Mental Trader BOOK LAUNCH - 50% discount off the cover price for a short time.
We have started a series of articles on trading psychology on this blog. These articles are based on material in our NEW BOOK, THE MENTAL TRADER: Winning the Mental Tug of War in the Market.
This book has been reviewed by Daryl Guppy and Alan Hull.
ABOUT THE BOOK, Daryl says:
"I think he (PAUL) has got some useful and interesting things to say. Thisisnew material and a good guide for new and existing traders."
ABOUT THE BOOK, Alan says:
"Hi Paul, just finished reading your book and I believe it to be a well written book with some very worthwhile insights - its engaging, anecdotal and reflects the fact that you are obviously well read yourself and an experienced trader/investor. I would recommend it to my students but I would place the caveat on it that it requires a degree of prerequisite knowledge and market experience."
Thanks Daryl and Alan.
This book has been reviewed by Daryl Guppy and Alan Hull.
ABOUT THE BOOK, Daryl says:
"I think he (PAUL) has got some useful and interesting things to say. Thisisnew material and a good guide for new and existing traders."
ABOUT THE BOOK, Alan says:
"Hi Paul, just finished reading your book and I believe it to be a well written book with some very worthwhile insights - its engaging, anecdotal and reflects the fact that you are obviously well read yourself and an experienced trader/investor. I would recommend it to my students but I would place the caveat on it that it requires a degree of prerequisite knowledge and market experience."
Thanks Daryl and Alan.
This week's FREE article in PDF
Hi Everyone,
In keeping with the gambling/trading theme from last week, I have uploaded another PDF article on my blog which is available for download. It is called Personalilty and Gambling. CLICK HERE to download it.
In keeping with the gambling/trading theme from last week, I have uploaded another PDF article on my blog which is available for download. It is called Personalilty and Gambling. CLICK HERE to download it.
This article is based on a chapter in our upcoming book on trading psychology called The Mental Trader: Winning the mental tug of war in the market.
For anyone interested in trading the market using my personally devised trading techniques as outlined in my EBook called Simple Tactics, Profitable Trading, you may also be interested in downloading the free fortnightly newsletter from HERE
For anyone interested in trading the market using my personally devised trading techniques as outlined in my EBook called Simple Tactics, Profitable Trading, you may also be interested in downloading the free fortnightly newsletter from HERE
All the best in bull and bear markets
Paul
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