Stories that can be related to Trading  

Posted by Book Eater in

Quotes/Articles I came across that can be related to trading:

1.) Life is like a buffet.

There are many things you want to achieve; thousands of things. They all look so exciting. You want to conquer them all. You can’t wait to accomplish everything, but you only have so much time, energy and brain power.
What do you do now?

You need to take one bite at a time.

Focus on what you have in front of you now. To truly enjoy the food you can’t put too much in your mouth. Your stomach needs to slowly digest it. Focus on one dish at a time and get the most of each dish.

To truly enjoy your amazing life journey, you need to focus on and pay full attention to what you have in front of you right now. Allow your mind, body and soul to completely submerge into this one thing. Allow yourself to get the most out of it. Allow yourself to truly taste it.

When you finish the first dish no one will stop you from getting your second, third or fourth servings. Get one thing done and then come get your second serving as soon as you can.

2.) Value – slipperiness of that classic economic concept

Just as we can measure happiness, love, wealth by the degree to which we have lost them, value works in the same fashion.

The only value of any importance is the value that someone else places on a stock at any given point in time.

Maintain a healthy emotional detachment from the stocks you buy and be ready and willing to get rid of them at the drop of a hat.

3.) Chris Ferguson Poker Rules:

To ensure that I keep my bankroll intact, I've adopted some key rules:

  • I'll never buy into a cash game or a Sit & Go with more than 5 percent of my total bankroll (there is an exception for the lowest limits: I'm allowed to buy into any game with a buy-in of $2.50 or less).
  • I won't buy into a multi-table tournament for more than 2 percent of my total bankroll and I'm allowed to buy into any multi-table tournament that costs $1.
  • If at any time during a No-Limit or Pot-Limit cash-game session the money on the table represents more than 10 percent of my total bankroll, I must leave the game when the blinds reach me.
It ensures you'll be playing in games you can afford.

These rules also prevent you from being completely decimated by a bad run of cards.

Stepping away can give you a fresh perspective and heightened motivation to play well when you return.

4.) Medium-weak hands on the river

Here's a play I see again and again. Bad players make it. Good players sometimes make it. People with WSOP bracelets even make it occasionally. And each time I see it, I just scratch my head. Maybe you make this play and can help me understand it.

I'm talking about betting a medium-weak hand on the river.

There are only two reasons to bet the river. The first is to bet for value -- a bet you make when you expect to win even when you get called. The second is to bluff, when you're hoping your opponent will fold a winner. Your strongest hands work as value bets, and your weakest hands work as bluffs. The problem with these medium-weak hands is that the hands your opponent will lay down here are losers anyway, and the hands you get called by almost certainly beat yours.

No one likes to face the hard choices, and it's often a good idea to avoid them when possible, but this particular pre-emptive strike gives too much away. Throwing away money isn't a rational response to the fear of decision-making.

5.) The wisdom of the cockroach.

The cockroach has survived a longer time span, and a wider variety of harsh environments, than humans could ever match. It is one of the creatures man cannot wipe out no matter how hard he tries. And yet, the cockroach's key risk management strategy is embarrassingly simple... simpler, even, than putting in a stop loss. The deeper point is that simple equals robust; by refusing to get fancy, and sticking with the tried-and-true, the cockroach ensures its reign as champion survivor. Bookstaber uses the cockroach (and other examples from nature) to argue that we, too, should consider cutting back on our excessively specialized ways. The cost of a rough-edged strategy is forgoing excess profits in accomodative environments... but the benefit is increased likelihood of survival in a much wider range of environments, including the truly harsh ones.

"liquidity is a coward" as the old saying goes, always running away when you need it most, strict disclosure rules would likely make bad market conditions worse at the least opportune times.

Two groups in particular may be left smiling at the end of this book -- value investors and trend followers. In both the theory and practice of their normal operations, value investors and trend followers intuitively embraced Bookstaber's message a long long time ago, favoring longevity and robusticity over the temptations of adjusting to the moment. It is perhaps not surprising, then, that value investors and trend followers are arguably the most profitable market participants by far on an absolute-dollar basis, hauling in hundreds of billions in profit over the course of many decades. They are champion survivors too... with a touch more class than the cockroach.

6.) Losses

a.) There are many reactions to unanticipated losses: cut them quickly, ride out the storm, even double up the bets. Each of these sometimes works and sometimes makes the situation worse. Only after reading all the permutations and outcomes can you understand the stark choices posed as the disasters unfold. The players are neither idiots nor geniuses, they are smart but ordinary people, facing understandable human dilemmas.

b.) Human nature is such that very often things have to go from bad to worse to bloody awful before the necessary paradigm shift happens.

c.) When there is no more they can reasonably bare, then they do have to pass some of the burden down the chain.

Against this backdrop of uncertainty, the story is causing even more concern perhaps than it is elsewhere. Things are changing alright, but let's not panic. One rotten link and the whole lot could collapse in a heap. And who's at the bottom, pressed by the weight of the forces above and gasping for air? You?

d.) The beauty of trading is that it doesn’t just create great wealth, it also teaches us great lessons. And, teaching those lessons offers a greater high to which profits alone can never compare.

Good Links:
* An Online Newspaper - The Newsflashr site Very useful service, for catching patterns in global news.
* Streetstories - News and information on great traders and hedge funds


0 takes

Post a Comment