Following on from the theme we have been discussing in the past 2 blogs on the differences between well recognised societal paradigms and how they differ from a market paradigm, let’s move on to discuss the development of trading competence. This topic will feature over the next 4 weeks as we examine the 4 stages…
Continuing from last week’s topic “societal paradigm vs market paradigm” I’ve used another 3 examples of how our social paradigm can deter us from success in the market. Whilst the societal paradigms that we learn and adopt as part and parcel of our involvement in society stand us in good stead to co-exist amicably (most…
“If you think you have discovered a great truth and it is not a paradox, I suspect you may be deceiving yourself.” – M. Scott Peck, author of popular self-help book, ‘The Road Less Travelled’ From an early age society, through our parents and our other experiences interacting with our social environment, teaches us fundamental…
Part 2 – Mechanical: The dictionary definition of mechanical reads: “like a machine, as if acting or doing without conscious thought.” Unlike the discretionary trader, a mechanical trader uses a set of unambiguous rules to guide his or her actions in the market. These rules determine: o when to buy and sell o what to…
Part 1 – Discretionary: Discretion is defined as: “freedom or authority to act according to one’s judgment”. Statistically most investors use discretionary decision making processes in the market rather than mechanical processes. Unfortunately, very few discretionary traders have longevity in the market and hence you could conclude that they don’t have an edge. A discretionary…
In this, my final posting on this topic, I respond to Victor’s comment posted in response to my 28 May Blog. At first glance this blog may appear complex but the area of risk management and money management is an extremely important area of active investing so persevere to understand it well. Hopefully Blog readers…
Response to Comment by Thomas Rac: “as you are using technichal exit signal only as to exit a stock what is your interpretation of that valid signal.bear in mind that any particular stock might go temporary for a breather even 10 or more percent but you still would not know the outcome and sustained a…
As traders and DIY investors we are tasked with skilling ourselves in an environment that is full of known and un-known variables. To help prevent the unknown variables from continuing to take capital from our portfolios, it is necessary to implement a strategy that exits trades based on either a technical exit signal or a…
A universal ‘formula’ exists when trading and investing that needs to be understood and positioned in the trader’s psyche to continue to be successful on an ongoing basis. Anybody can place a few profitable trades, randomness will take care of that. But to continue to be successful on an ongoing basis requires more than the…
Marcus Padley, of stockbroking firm Paterson Securities, in his regular column in The Age wrote a knowledgeable piece that every active and passive investor should read. The title of the article “Where brokers dare, we should tread carefully” is a two part editorial in which Marcus conveys the 10 lessons learnt by Mr Harry Hindsight.…
