We all know about yet another week of massive whipsaw, all within our Dow Projections, and profitable for us on all trades we made in the OEX.
We all know Floyd has been laying low on new stocks or options for Blue Chip Options, preferring to buy more of certain issues on the down stroke. A great example in our Jan2013 AAPL call when dropped 24% after our first buy. I bought twice as many, lowered my cost, and just sold the position for a 40% sale.
Most traders never follow I buy LEAPS not just to hold them, but also to buy them on the down stroke, if I see the are ripe again for an upstroke.
Often we speak of Richard D. Wyckoff, the famed trader that my Dad, with Wyckoff Associates, Inc. was the sole licensee of. I grew up studying Wyckoff, and continue to highly recommend Charting the Stock Market: The Wyckoff Way.
Jack Huston, President of Stocks and Commodities Magazine but the actual writers edited this book were two young men that worked for my Dad when I was growing up. They know their stuff. The following website is from another Wyckoff student and worth your reading
http://www.readtheticker.com/Pages/Blog1.aspx?65tf=267_wyckoff-20-for-the-21-first-century-2011-07
Then, for those of you that follow and study the internet portion of technology - a great article on what some of these companies are and will
http://online.barrons.com/article/SB50001424053111903404604576405802487034120.html
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A subscriber this week wrote me a lengthy email crying out for help, which I’ll simply paraphrase.
“-Do I not love myself? I fail at this trading no matter how hard I try. Am I setting myself up for failure, or how can I stop myself”
I gave this Advanced Mentoring subscriber my point of view and he sent it to a friend, a clinical psychologist who specializes in sports medicine, and our subscriber sent both his commentary, and mine, and here is how his Dr. responded:
“Well written emails to Floyd that clearly capture your dilemma. I read a great chapter recently in a sport psych book titled “Try Easier”. The thought behind it is that when we try too hard (as you reference with regard to baseball… and perhaps the market too?), our performance actually suffers. The suggestion is to back off a little bit (go at 90% intensity instead of 100%) and you actually perform better. Physiologically when we try harder it’s like stepping on the gas and brake at the same time… our muscles work against each other.
One thing that needs to change is/are your expectations of yourself. Perfectionism, in all its forms, is nothing but a set-up for disappointment. Unless you have complete control over all aspects of the situation, it’s difficult to expect everything to go your way or as planned. In sport and trading, so much of it is beyond your control. All you can do is decide when to get in and when to get out, what happens in between is uncontrollable, therefore not worth focusing on or trying to control. You will drive yourself nuts trying to control the uncontrollable.
Question… to what degree are you influenced by being perceived by others as a “successful trader”. Do you want to be able to tell people that you scored big and out-smarted the market. Somehow, this matters?? Truth is, nobody cares one way or the other. I believe people would be just as impressed hearing you made $100/day for 10 consecutive days rather than scoring a $1000 trade on 1 day.
The difference between you and I is that you have a lot more riding on the market than I do. The other way to say that is I am less dependent on making $$$ in the market and see whatever I make as gravy… I don’t NEED to make money there, I would like to, but don’t need to. For you I think it might be different. There is a pressure there to make some money… not sure if it’s self-imposed or what, but it’s like you have to win big or it’s all for naught. The joy can come from executing you plan precisely, not whether it nets you 2K or 5K. The gains will add up…if you let them!!!”
This psychologist has it spot on, and each of you should print this and frame it.
The primary failures I see in traders that I work with is that “they expect too much money” and are waiting for “more”, only to see it all erode.
Our success has come from:
1. Trade by rules
2. Never make too much money. Be happy with small 20 and 30% earnings most of the time. There is no place else in the world you can earn 20 or 30% on money invested, sometimes several times a day, with your only overhead being cash.
3. Not listening to talking heads, news, or predictions. Studying only the FACTS.
Here’s an example: last night (7/7/11) ABC interviewed Maria Bartirimoro.
http://en.wikipedia.org/wiki/Maria_Bartiromo (Really read about her background)
Cute, able to articulate well, and after the question “is it likely that we will repeat a second full recession because of the high unemployment figures, and struggling economy. Maria, probably making a million a year for her opinion, very articulately points out from a chartists perspective that “yes, it is indeed possible”….she then gives a few reasons….and looks very serious as she says “Americans must be prudent at this stage”.
Please excuse me while I climb up the soapbox and respond:
What the fuck? Any child could tell us the market could go up or down and that things look bad so they could get worse. And another child, taught only to see that we have returned the stock market from lows never seen before 4 year ago to near 13,000.
I sit there seething because I can see Joe and Jill at home listening to that smart financial lady telling them that everything could be worse.
Pure unadulterated histrionics. Perhaps Maria even suffers from:
What is histrionic personality disorder?
Histrionic personality disorder is one of a group of conditions called dramatic personality disorders. People with these disorders have intense, unstable emotions and distorted self-images. For people with histrionic personality disorder, their self-esteem depends on the approval of others and does not arise from a true feeling of self-worth. They have an overwhelming desire to be noticed, and often behave dramatically or inappropriately to get attention. The word histrionic means “dramatic or theatrical.”
This disorder is more common in women than in men and usually is evident by early adulthood.[1]
My point is that we believe what we read or are told, and it soon becomes true.
Mass mesmerism: mes·mer·ize
[mez-muh-rahyz, mes-] 
Show IPA
–verb (used with object), -ized, -iz·ing.
1.
to hypnotize.
2.
to spellbind; fascinate.
3.
to compel by fascination[2]
Study real facts. Maria is cute, but she does not even have the educational background, so noted, to be making these statements.
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