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Trading Do You Trade or fight in the market in panic?

Discussion in 'Shares' started by wdongli, 4th Jul, 2011.

  1. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    Do You Trade or fight in panic?

    Panic attacks affect a lot market players

    Panic attacks affect a lot of market players, especially those who lose their shirts before. Most of them are simply unaware that they are even suffering from panic attacks.

    The panic attacks involve a period of intense, often overwhelming and irrational fear of distress that are usually associated with other fears.

    Primary symptoms with the panic attacks

    There are several primary symptoms associated with the panic attacks.

    For example, those who have experienced them generally state that there is a brief onset of trembling, followed by a shortness of breath.

    Some experience more pronounced symptoms ranging from heart palpitations to hyperventilation to choking or smothering.

    Other causes of panic and "fight vs flight option"

    The general consensus that panic attacks stem from other phobias, or fears, which in turn triggers a panic attack upon exposure to these fears.

    If a person suffers from acrophobia, or fear of heights, for instance, upon flying in an airplane, this phobia may be triggered, causing the person to enter a panicked state and, hence, have a panic attack.

    During a panic attack, the "flight vs. fight" reaction comes into play and the person experiencing the attack suddenly has an overwhelming desire to leave the situation they are currently in.

    AND Who Is More Likely To Suffer From A Panic Attack?

    Too much physical and mental challenges and stresses

    Most of those who are chronic sufferers have jobs that are either very physically or mentally challenging, leading to a great deal of stress.

    When stress levels are high, and one does not have the ability to simply pull away from the situation and relax, the body often times goes into overdrive, a condition that, if occurring to often, can lead an individual to overheat, much like a car would do.

    In an individual, however, this overheating takes its form in a panic attack. The heart will being to race, palms will grow sweaty, and a general feeling of gloom will preside, forcing the individual to step back from whatever he or she was doing, take a breather, and relax.

    Personality traits to contribute to a panic attack

    There are also several personality traits that doctors believe can contribute to a person experiencing a panic attack. People who are extremely analytical, are obsessive, emotionally sensitive, or need to be in control at all times are also more likely to experience a panic attack.

    The primary reason people with these personality traits are more likely to experience a panic attack is because these people are likely to focus all of their attention on a single issue, and when this issue is no longer under their control, they are likely to 'freak out', thereby resulting in a panic attack.

    There is an obsessive or compulsive aspect to all of these personality traits, and it is those kinds of qualities that are most prone to trigger a panic attack.

    Consider Day Trading In The Context Of Trading Psychology And Trading Panic

    It is important to note that panic attacks are not usually indicative of some underlying medical disorder or psychological problem. Most of the time, normal people, ones who are completely healthy, are those who experience panic attacks.

    When you consider the characteristics of day trading, and all the associated fears and doubts, both for the outcome of the trade itself, as well as the related self-esteem of the trader receiving that outcome - certainly day trading is a stressful undertaking done in a stressful environment - the potential for this to manifest into what becomes a panic reaction is greatly expanded.

    Again, this should not be viewed as something inherently wrong with the individual, this is the normal reaction - this can be controlled.

    Consider Stress-Panic Escalation In The Context Of Accurate Evaluations

    There are a number of ways that your thoughts can become distorted - recognizing and refuting these distorted thoughts are necessary as part of the plan to control the emotion.

    Consider the following cognitive distortions that are common to your thinking in general AND then how they show up in your trading in specific. For instance HOW many times have you lost 3-4 ticks on a russell trade AND said that you got killed?

    1. All or nothing thinking: No shades of gray exist so IF your performance is not perfect - you view yourself as a complete failure.

    2. Overgeneralization: One single negative event is viewed as an endless pattern of defeat.

    3. Disqualifying the positive: You discount all positive experiences.

    4. Magnification or minimization: You may exaggerate the importance of an error or someone else's achievements. You may underrate your own strengths or someone else's weaknesses.

    Remember don't tell you such as those:

    Should Statements: You motivate yourself with shoulds-oughts-musts which leads to guilt. When you direct these statements inwardly you experience exaggerated feelings of anger-frustration-resentment.

    Labeling and mislabeling: You label yourself inappropriately - I am a loser - I am a stupid idiot. You are NOT your trading. When you do this it makes it difficult, if not impossible, for you to continue constructively.

    Never and ever to allow yourselves become the captive of your own enemy, your negative sensation in the market. Do all to prevent them happen by optimism with the guard!

    No loss, no harm, and fail safe. That is good enough if you don't lose too much and time would sharpen your mind, skill, and the market playing result if we dance on tap to work for wise, intelligent, and happy market game.

    Do remember that we could not win under some situations without matter how hard we try; we don't have the chances to understand something, which naturally we could not understand.

    Don't think or touch what we could not control or understand; it is the action to kill the time for nothing. Sitting back and pondering what you can do and what you cannot do for your profit, which would make you wise and efficient to make the money rather than cost the resources for nothing.

    Don't think China in detail. Don't think US and EU would decide the future of a individual market player. They are very important forces to set the direction for this world but at anytime some individuals would lose and some would win.

    China tips off but you are safe will make you feel better. GFC killed so much money but if you get the full ride on the V-shape recovery, you win! If you could keep to win and be optimism with guard, you have contribute a lot to the human being future.

    Don't take the responsibility we don't need to take when we just play the game in the market. Do you worry Middle East when you play the chess with your friends? You do? You are insane and you would lose your competition with your friends with the absurd mind. You live with too much load but fail to take your responsibility!

    Panic? It is your life if you don't know what you can or not! Are you stupid? You should be panic for your absurdity and insanity and recovered from it. After that you would know what you should worry about!
    Last edited by a moderator: 5th Jul, 2011
  2. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    Panic-Induced Foolishness

    Naturally we all could be very emotional and could be in panic, which does happen we lose the disciplined and fail to train ourselves to prevent from panic. It is a wide accepted observation that is "foolish behavior often occurs when one's critical faculties are short-circuited by rapidly unfolding events.

    In such a scenario, one's initial impulses may lead one down a foolish path, and it can then become very difficult to reverse course and extricate oneself from the consequences of the initial bad decision. That is why it is so important to remember you have to be guarded when you work on something you think very important and very optimism!

    Panic is not the privileged of bums in the market but most of genius tend to be much easier to be panic and lose the shirts or accept the consequences they could avoid. Panic could be found among the people at the opposite end of the financial, educational and age spectrum but who both ended up in defeating since the panic will result in such bad consequences always.

    The panic comes in due to their inability to respond with sense and character to a challenging situation. Don't let you be desperate and panic, which would make the bad things in a self-defeating prophecy. In most of case genius break up their wings in panic!

    A real foolish behavior resulting from a panicked decision

    It was a self-made story of Food and Lifestyle guru Martha Stewart.

    In 2001, the taking of her company to be public had made Ms. Stewart a billionaire and one of the most famous and wealthy women in America.

    This was all put at risk when she ordered her broker to sell her shares in a start-up drug-manufacturing company called Imclone after the broker's assistant had given her a tip that the stock was about to decline due to an unfavorable ruling by the Food and Drug Administration on Imclone's application for a new cancer drug.

    By making this sale then, rather than waiting until the FDA ruling became public, Ms. Stewart saved all of $45,000, but she wound up going to jail for five months for insider trading (actually, as is often the case, for lying to investigators about what she had known).

    $45,000 is not too much to her but cost of the panic is huge

    If it was before 2004, I would say she deserved but I just feel the sympathy for her panic reaction. Some money could be saved and some you have to pay out. It is not just about the moral but the consequences to you and your society!

    Let's see the consequences:

    1. she was removed as CEO of her own company, lost a substantial portion of her wealth (much of which she has been able to regain), and

    2. suffered considerable humiliation (for example, the British government blocked her from traveling to England to give a talk at a design college).

    She compounded her initial foolishness

    Even after her action had become known, she could have avoided a jail sentence if she had been willing to come clean about what she knew and when she knew it.

    She compounded her initial foolishness in making the sale, saving what was to her chump change, with additional foolishness in which she persisted in denying any wrong-doing.

    Why she behaved so foolish and she shouldn't?

    All of us do something wrong morally or not but you could not allow your soul to dust too long and too much. Everyone likes money but good people make the good money, be able to make good money, and perhaps great money!

    To understand why she behaved so foolishly, you need to see four factors come into play:

    1. A situation factor: no time to think about

    The decision was made during the end-of-year holiday, while she was taking her private plane to a vacation. She learned of the Imclone problem during the plane's refueling stop, and she was unable to reach her broker, or her friend and Imclone CEO (both of whom also eventually went to jail).

    Nor was she able to reach any of her legal and financial advisers, some of whom likely would have warned her of the risks of trading on this inside information. Thus, a situational element, often present when people make a foolish impromptu decision, was the lack of time to think about the decision or to seek wise counsel.

    2. Don't know it was improper to do perhaps!

    Cognition enters in when one considers the possibility that she, for all of her brilliance, may have lacked the tacit knowledge that her action in selling the stock was improper.

    One fact which works against this hypothesis is that she had worked for a brief time as a stock broker on Wall Street early in her life. However, she resigned that position under a bit of a cloud, allegedly because of kick-backs to brokers for pushing a particular stock.

    So it is certainly possible that she was not as knowledgeable about securities law or ethics as one might think.

    3. Questionable personality

    Personality likely played a major (perhaps the major) role in explaining her foolish action. She was, by many accounts, at that time a highly arrogant and imperious person, who was determined to get her way in all matters large and small.

    4. Personal interests over society's rules!

    It is very possible, indeed likely, that Ms. Stewart had a sense of entitlement and felt that society's rules did not apply to her, especially a rule (banning insider trading) that she knew to be frequently flouted.

    All of these found ways to play the roles for the panic attack

    Let's guess how these four factors played the roles in her panic reaction and selection of the options:

    1. She was greedy or panic when she learned that she would lose the money

    2. Putting the case that she rigidly refuse to consider what wrong with her action and admit she had done thing wrongly, actually and basically, she was facing a classic dilemma.

    3. The dilemma is what should be chosen, the moderate risk to her image and business of admitting guilt, most likely to a misdemeanor; or the major risk to her image and business if she were to be convicted of a felony.

    4. Unfortunately she made a not-wise selection, which turned out to be a disastrously stupid choice.

    Why do we say her selection is foolish and stupid?

    The stupidity was because that the risks were both obvious and potentially disastrous. Don't need to argue how she was bad or good but just from wisdom point of view, she should wisely pick up an action which minimized the potential risk.

    But she could not act wisely and marked her as an example how rich people could make immoral money without thinking about their social responsibility!
    Last edited by a moderator: 5th Jul, 2011
  3. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    Panic: all of desires to fight will be gone

    It is about survival in panic

    Panic puts all of market warriors in a situation to think about survival. All of hopes to escape from a complete failure gone.

    There are more and more warriors chose to run away. Sellers either choosing to sell or being forced to sell, and since there are more sellers than buyers, prices continue to drop.

    The selling is so powerful that a majority of buyers during the rally go underwater and more and more have to sell to service their margin loan and endure the associated pain and stress.

    Transition from panic to capitulation

    Once the price drops down continuously after more and more warriors give up to fight but run away, the infectious belief that the rally is over, will be accept by nearly all of the market warriors, which will push the market sentiment transited from the panic stage to the capitulation stage.

    A tipping point to sell collectively

    There is a tipping point where a critical mass of market participants either decide to sell or are forced to sell. Once a critical mass of selling is reached, the selling causes prices to decline further which in turn causes more selling. This convinces even more people the rally is over yielding even more selling: a downward spiral.

    The same price-to-price feedback mechanism that served to drive prices up during the rally works to drive prices down during the crash. Collectively, everyone in the market accepts prices are going to drop further, and they need to get out: Now!

    All cannot afford the losses sell out for capitulation

    Of course when everyone knows prices are going to drop, and everyone is trying to sell, there are very few buyers.

    Each market participant has a different threshold for pain. Some give up early; some give up later; some stubbornly try to hold on, but in the end, by choice or by force, everyone who cannot afford their losses sells out and capitulates to the forces of the market.

    All now believe the market was a bubble

    Each seller accepts the market rally was a bubble, and the frenzy of selling activity clears out the overhead supply. The capitulation stage is the counterpart of the greed stage.

    Sellers are everywhere and buyers are scarce. This puts prices into free-fall until a critical mass of buyers is ready to buy again.

    Who are the buyers when the warriors surrendered?

    Risk-averse: buyers and lenders

    Since buyers in the aftermath of a bubble tend to be the risk averse who did not participate in it, they will make cautiously low offers on properties. Buyer caution is reinforced by lender caution.

    Want a loan, go to the hell!
    In stark contrast to the days of bubble lending, large down payments are suddenly required, appraisals are carefully reviewed, eligibility is tighter, and most exotic loan programs are gone.

    A war gets it last stage at which all are trying to survive, winners and losers! The winners get some remaining asset covered by the smoking ruins and the losers lose all and struggle in the unsustainable pains, regret, and more and more despair. It seems that all are in the hell!

    Try to get the lost memory in the hell

    I didn't get this kind of feeling as that in the hell since 2004 but I did feel the pains as in the hell after I lost my first $400,000 paper profit in IT bust. Too much hopes gone, too much regret in, too much what if I don't, too much suspect on my own capability to stay in the market.

    I just desperately wanted to stop this feeling as possible as I could and usually and most effective way is to escape from the market, which was what I chose too between 2001 - 2003 while I tried to figure out what I was wrong.

    It is not too bad but do cost a decade for recovery

    Join a defeated army is terrible and the consequence is much worse than what we could image. Actually it takes me a decade to recover mentally and financially. What we really need to remember is when the market is excited and extremely elated, we need to get out; when we try to buy in the ruins we have to hold enough back up in hand in case the market gets into short-time desperation again in the ruins; we need to see the risks in euphoria; we need to see the light in the crashed tunnels; we need to be prudent always. Something could be wrong and damage you in the war and after the war!

    Find what's wrong inside you and move forward with prudence.

    Something is seriously wrong and could you avoid the same mistakes again? It is very hard to recover from the traumas and then most of the losers would be in the hell for long enough time.

    I don't believe the market would crash and put all in the captive camps soon. I just want to refresh my lessons after I made a series of mistakes this financial year. We paid for our failure and then we should get the lessons!

    The lessons in IT bust help me passed through GFC. I do hope the effort to refresh my memory of the lessons could help me to sell before next Great Crash, which will be in!

    Don't allow you to be a warrior in the army which move euphorically into its valley of death, where Mr market is ready to drag anyone who dare to be in onto the slaughter table.
    Last edited by a moderator: 5th Jul, 2011
  4. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    Could you feel the despondency of the warrior?

    After the panic selling, after the market gets the point of capitulation, after all you have in hands gone, what could you do or think. Your mind is in shallow and then you would just lose any hope and stay in despondency! The noise of depression arises everywhere. The crying for your own unfortunate and the falling sky.

    Could the song below shock you out from the exciting, thrilling, euphoria, which root in your greed and its brother fear? A warrior becomes a captive in the running away for survival but he could not see where is his future!

    The Noise of Depression

    I cry and my eyes spill blood onto the floor.
    Acheron flows in silence,
    And the noise intensifies my pain.
    No will to speak.
    Not even enough hope left to weep. Anymore?

    I travel on through the noise,
    Searching for relief.
    Distorting my mind.
    Only when intoxication distorts is the time I can laugh,
    When clear I laugh only through scorn.

    For I have seen of the blackest,
    And each sight hath taken from me.
    Such misery?
    Such sorrow?
    Such desolation?
    Such death? and I've traveled for it in times of silence.

    Close to death so many times.
    When my hope's been shattered,
    When my anger's been unbound.
    And my torn soul has cried out for death.

    Killing myself through constant abuse,
    But I have always awoken,
    My scars still bleeding,
    And the noise it still carries on?

    (Greg. Winter 1993)

    Yes the noise still carries on since the war could not end completely in days.

    The warriors have fought bravely until they start run away. But the running away for survival just only satisfy their instinct but they are human and they need the hopes. No hopes what could they feel the meaning of the life?

    The psychological challenge is ahead of them. Where would they be tomorrow? How could they let the shallower souls have some hopes of the life again? Only the toughest warriors could find a cave to such the cuts, where they store some necessities for the worst time, and question why they join the war and what they fight for.

    The ruins will be there for sometimes and the captives would be released one after another while the things recover! But damage has been done! Most of warriors have been gone as ERG stream disappeared in all of share trading forum.

    Most of survivors of the warriors just choose to forget, forget all, forget the pain, and sometimes try to forget who they are. What could you expect from them? They are just the members of the army but don't know and then don't have the capability for its destination or fate. Some others" mistakes for the defeating? They don't want to think about but they would blame and curse all of the evils they feel for their unfortunate.

    Do you have the right to blame them? No! You don't need to be wiser and intelligent in next war! Could you? Most of the failed warriors would fail again. They are trained as fighter without matter what the consequences are!

    You seemingly like the blood and the horror, don't you? I don't! I just don't want to fight for the herd any more in the war place, market!

    It is disgusting evil and put so many brave innocents into the hell. I want to know what is the war and its consequences. I want to know how warriors could join the herd for a cause they could never win. I want to know them and then I could know myself!

    You could not be ignorant and arrogant to protect yourselves and service the winners and losers in the war for your deserved profit. If your instinct is so strong, you have to change your personal characteristics and behaviors in the war place. It doesn't allow the mateship to be the belief of the wise businessmen.

    You have to be organized, disciplined, self-reliant, analytical, and then wise and intelligent with great self-aware and environment-aware and skills to protect you and find the best time with great discount gems for the best time to come back. After a terrible war, the prosperity would be back without matter how terrible the ruins!
    Last edited by a moderator: 6th Jul, 2011
  5. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    All promising gone from the herd!

    Herd, you are bloody devil. I follow your promises but I just lose all! Could you see the similar reactions after the market crash among the traders, investors, and speculators? No? It is the problem.

    1. Bereft

    Bereft promises made unto me,
    I always remember watching them fade.
    Upon winds of blackened torment,
    The promises' I couldn't see.
    For they are just words,
    And your words are empty.


    Lies? Lies?

    Lies are all humanity knows,
    For if they spoke truth it would show,
    That they are nothing but a shadow of each other.

    Confusion and lies engulf me,
    The bastard humans disgust me.
    I scream alone in the mountains, venting my hate,
    Calling forth emptiness to surround me.
    So that I may see clearly with my mind,
    The words they use to try to blind me.

    I can see.
    No one keeps their promises,
    (wdongli: all of warriors are the losers after despondency. The herd could not win as the commander of the warriors. They could not keep their promising and not qualified to keep their promising! It is childish you curse the men who is insane for your failure!)

    No one ever cares,
    And neither do I anymore.
    Humanities demise is what I lust for.

    (wdongli: It never has humanities to let you enjoy the lovely life in the war! The humanities should demise and wisdom and intelligence become alive. It is stupid to use humanities as excuses in the war to put you in the hell!

    Using promising as the bases for the future as the base for your winning in the war is the start point to suicide. In the market, you have to get the value with great discount without matter how you get them!)

    (wdongli: After you run away and survive, the ruins give you all of the reasons to hate. So the following could be a vivid image or lovely words about what you are trying to do at the moment you accept the despondency! However it could be the hope even you don't realize it!)

    2. Only Hate (Baresark)

    Disgust for the standards set by you,
    Disgust for your aims of mass control.
    Freedom is your silencing mechanism,
    Fortunately for you people are too blind and ignorant to see,
    That while you exist they will never be free.

    (wdongli: Without freedom of your mind how could you get your freedom financially? When you beg for the tips, you hand in your soul for control!)

    Your lies of freedom I spit upon,
    From birth you have calculated our control.
    (wdongli: war needs the army to act as though it has one mind only. Do you know why fundamental communism could win in Soviet Union and China? The pigs' minds had been washed by the pig's chiefs, who were great to wash out all of the minds until the war gone)
    Born as a number on your little machines.
    A number to check upon, to keep under control.

    Now to the blind I'll help you see,
    That you are born under a contract laid down by society,
    Obligations to obey their laws, no freedom of speech.

    (wdongli: Realization of the lies and empty promising could put you into another war. Are you wise to win? I don't trust you if you just use your primary instinct again!

    You are one mind, they are many.

    Justice has been decided by the narrow-minded bastards
    Who lived centuries ago, leading the fools,
    With the commandments of their false "God" they made up the rules.

    (wdongli: it is always one mind control a lot of minds for the wars until you really want to get out of the control and be ready to be in freedom for your mind)

    **** your morals I have my own mind,
    To decide what is best for me.
    You know nothing of psychology, only of fantasy,
    And love of order in your tidy, empty lives.

    From lies you built the order of market(wdongli: use market to replace society),
    Scepticism your enemy, you try to make people believe,
    From an early age so that they cannot retrieve,
    Their instincts of life and questioning, so that they just
    Follow blindly, but you'll never blind me

    I have only hatred for those in herd (wdongli: used herd to replace authority)
    And the blind fools who follow.
    So weak in spirit, never questioning.
    I have only hate for this ****ing society.

    So weak.

    I have only hate for this ****ing society.

    (wdongli: get lost again and you should hate the ****ing insane yourselves! You fail yourself not this lovely society! Could be stronger and then stand up on your feet?)

    (Greg. 10/1993)

    "Most of the evils of life arise from man's being unable to sit still in a room," said Blaise Pascal.

    Could we force us to sit down in the ruins and let our minds have a perfect rest first?

    Most of warriors in the market, who come from the offices and workshops failed in this critical question.

    They don't have the time to know wisdom and intelligence only could come from the sitting down, not from the gut crunching stop-losses at least! Get your soul back rather than get the weapons, such as the rocket launchers or some systems for war, into your depot.

    Wdongli's Blog
    Last edited by a moderator: 6th Jul, 2011
  6. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    Bear Markets don’t always end with a bang!

    We all like to believe bear would be defeated in one defined pattern but it never could be true. Do you surprise if you were told that “Bear Markets Don’t Always End With a Bang — Sometimes It’s Just a Whimper and fight back to overwhelm any optimism residual left in the market!”

    There’s a belief that the market can hit bottom only when vast numbers of investors finally capitulate, throwing in the towel and selling off the last of their stock portfolios. In theory, it is very true and if you could spot this moment, you could make a killing buying at the bottom.

    No official declaration of capitulation and bear could roar before its sleep

    There are two problems here. First, capitulation is almost impossible to define. Second, even if you could get a positive ID on capitulation, that might not do you any good.

    Market lows aren’t necessarily marked by tidal waves of frantic selling; just as frequently, stocks bottom out in a dull and lonely atmosphere as trading dries up and most investors no longer even care. Bear markets often end not in capitulation but stupefaction.

    Fad lady could capitulate more than once

    The idea is, we’ll know we’ve hit bottom when the fat lady capitulates. But she could just sputter instead, or capitulate more than once, or slowly slide around along the bottom. On the way down, you get a lot of faux capitulation. And how do you know, until after the fact, whether it is friend or faux?

    Oddly, even market pundits who believe in capitulation admit they can’t define it. You should know capitulation is a state of mind, without any specific definition based on accurate and objective format. The capitulation itself makes its catches to the bargain hunters or people who just look for the unexpected killings.

    The catch: falling knifes

    When panic selling is assumed to stops, people who don’t hold and buy in the past selling waves tend to be bottom fishers . This is when the price drop flattens into a bottom. One problem with calling the bottom is that it can only be accurately identified in hindsight. In fact, many traders and value investors have been caught buying into false bottoms only to watch the price continue to plunge - the so-called falling knife trap.

    Falling knife is a slang phrase for a security or industry in which the current price or value has dropped significantly in a short period of time. A falling knife security can rebound, or it can lose all of its value, such as in the case of company bankruptcy where equity shares become worthless.

    It could be very dangerous if you get dead fishes in hands

    As the phrase suggests, buying into a market with a lot of downward momentum can be quite dangerous. If timed perfectly, a buy at the bottom of a long downtrend can be rewarding – both financially and emotionally – but the risks run extremely high.

    This term implies that the investment will never be a good one again. Examples of stocks that have plummeted are plentiful; a widely-held stock can drop precipitously as the equity ownership is reduced to nothing.

    You can’t measure it before you see it

    “You can’t measure it; it’s best identified in hindsight.” “I wish I could quantify it for you so I could say, ‘Here, this is capitulation.’ But a lot of this is anecdotal. Talk to enough investors and you get an idea of whether we have capitulation.”

    Talk to them later, however, and you may get a different idea altogether. What seems like capitulation today will no longer qualify if the market goes even lower tomorrow. “I think I’m right that we had capitulation on Oct. But if we keep going down from here, then I would have to say that I was wrong and that it wasn’t capitulation.”

    So if you want to buy in the bottom, you have to try all to buy at the lowest price in the bottom channel. You have to buy in diversification. You have to buy what you could lose for any individual fish. You have to get the cash back-up in case you could buy more and still affordable. You have to think your portfolio as a whole and the worse selling or faux capitulation just open the doors to lower your cost.

    Usually bear stops in a cloud of indifference

    In truth, bear markets often end not in a crescendo of selling but a cloud of indifference.

    Market just waited for the bad times out!

    For example, take Dec. 6, 1974, a day that will long live in market infamy. The Dow closed at 577.60, down 45% from its levels in January 1973. Total trading volume was a tepid 15.5 million shares; a few days earlier, it had totaled only 7.4 million, tying the lowest level in more than three years.

    one of the nation’s leading security analysts, the market was “just waiting the bad times out.” Far from throwing in the towel, most investors weren’t even at ringside.

    Its dullness and no warning the bull woke up

    “The most interesting thing about [the 1974 market bottom] was its dullness,” “It wasn’t a crash, it was a mudslide. You came in, watched the market go down a few points and went home. The next day you went through the same thing all over again.”

    And then, without a moment’s warning, the bull woke up and took off. By Jan. 6, 1975, the market had shot up 10%, and a year after that the Dow had risen 54% from its 1974 low.

    You cannot spot an indisputable sign of capitulation in the market

    In short, bear markets sometimes end with a bang, sometimes with a whimper. You’re more likely to see a unicorn in your backyard or a chimera in your kitchen than you are to spot an indisputable sign of market capitulation.

    The obsessive attention so many investors are paying to the huge swings in the Dow suggests that we may not have hit bottom yet; stupefaction seems not to have set in yet. What we can be quite certain of, however, is that stock markets are already on sale, as everyone can see if it happens.

    If you have cash to spare, put some to work. If you don’t, save up until you do. But don’t kid yourself into thinking that you will ever get a clear signal out of such an unclear indicator. So you believe the Market throws in the towel, you should invert your mind. What if your belief is wrong?
  7. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    Market is a war place and whom you are is the key!

    It is my belief now that the market is a war place but no a command hub to command all in the market to get what each individual market warrior wants.

    It cyclically drives the warriors run towards to one extreme and then in a time after the warriors get the collective hysteria at one extreme point or stage, the consciousness would play its part; the instinct reaction to looming risks would strengthen the nerves for any signs of the risks. The running away has the contagious effect and the herd could take one action collectively without needing of any thought. It is the power of nature. So the sensational clock starts its swing to another extremely high point. This running away only has one consequences, the stampede of the shocked herd and huge damage of asset price and value, and shirt losing warriors.

    It is critical for a market game player to be conscious and disciplined not join the herd before the hand of the sensational clock touches, passes over, and starts to run up toward another extreme point.

    Do remember the lowest point has a few quality and quantity elements:

    1. Value and discount of the value(position)
    2. Length of time at this lowest point(time)
    3. Market sentiment and fundamental(environment)

    And the most important thing is seasons usually mean different lowest points since the environment would show different faces to the game players and warriors. Actually a series of mistakes I made mainly because I still could not understand the seasons very well! This misunderstanding turned me to be a desperate warrior for win in a season my way is the losing way!

    There are catches for all of our attempts since it is not a one way highway and we could be easily to take a wrong way for what we don't expect. This could result in anxiety, denial, desperate, fear, and worse panic, despondent, and depressed, which usually incurred by the consequences and extension how hard we be hit and how strong or weak our buffers are.

    There are often than not, falsified lowest point since it can only be sure in hindsight. Each attempt for better results in the market has its own catches!

    The holistic view of the market environment is extremely important since it at last decides if the herd would get into the track to be anxious, denying, fear, desperate, panic, capitulated, despondent, and depressed.

    The business minds is the last guard to avoid the falling knifes even at the lowest market sensational point!

    The completely know what you will use to play is very important too.

    Do you know whom you are? What's your financial strength and weakness? What's your sensational strength and weakness in the context of the market environment? What is your lovely rocket launchers or fishing rods? When and under what conditions they could be used for your profit or destroy your money?

    How do you organized your game or war? Do you have the manuals to tell you what you need in the different road conditions in the market for your lovely launchers or rods? What is the warning words for these lovely ones? Do you have the discipline and necessary drills to use them adaptively, effectively, and efficiently in all of market conditions in case you know the conditions?

    We could not be perfect. The losses would be unavoidable consequently for some our decisions. But the "no losses," "no harm," and "fail safe," should be the only consequence for your portfolio in worst case!

    Could you invert your mind when the market sentimental clock swings frenetically and have a procedure to cool you down first for you to evaluate the situation and pick the right launchers and rods for your least efforts to get the profit?

    Emotion is the most great resource for human being. We should use them prudently and don't let them run away as the desperate running away warriors! So go for what you could get with the concerning what you should get if you could not get without forgetting is you stumped carelessly or not, your portfolio would never less than you lock your profit last time.

    If you do all and still lose, it is a case you are extremely unlucky and you just accept it. If you hit out when the herd is at its weakest time, you should have little chances to be extremely unlucky! But you could be extremely unlucky and never push you down in this situation!
    Last edited by a moderator: 7th Jul, 2011
  8. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    Despondency is most risky in worst time

    Without matter you are warriors or not. In the worst market, if you lose gut and put yourself in the despondency you are in the most risky situation. as you are crazy and allow you to be in euphoria in the best market.

    If you buy you would kill you to buy in euphoria. If you short you would kill you too to sell in the collective despondency and depression of the market. This is the life rule and market rule that in worst you should look for chances and in the best you should look for the risks. Since in the worst time we usually are over-cautious and in the best time we usually are over-optimism.

    Logically if you are despondent in the worst time, you would lose the chances to win and then you could be in depression for quite long time. Why so many market criers since GFC? All of these criers could not get the riding chances in the V-shape recovery. They could not find the things make them feel better!

    What's life about? Long term depression would make you as though no soul! When I surf around in the trading forums, I do feel the depression among the posters. They hit the companies, whose prices crash, and hit themselves to tell the miserable market life they suffer!

    Why do you do that? Why do you put yourself in the iceberg after your ship has been sunk long time ago? Why don't find the positive sign for your life with great cautions and prudence? Darkness could be true but you need to be ready for the light appears for the new sunny days!

    I hate the despondency since it doesn't give any chance to feel life is good. It is the most risky matter in life!
  9. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    Depression: Are you ready to prevent from or deal with it?

    Market is a war place. Without matter how you are careful, you could make mistake and any little light could be the fire later to burn your house down. The consequence from your market could be very bad and out of your sustainability.

    So theoretically it you play in the market you need to understand what depression is, how to prevent it from touching you, how to deal with it if you are bad lucky! Something if have to happen on you, would happen! It could be simply out of you and everyone's control.

    Ignorance and denial would make us easier to move into the traps and get into depression. We need to know it more.


    What are the symptoms of depression?

    Some people feel sad and they cannot even figure out why. Other people have experienced great success on the job and yet they feel empty. The market acts against you and you burnt a lot of money, which cause you stand right up in the night and feel nothing could save you. You feel useless, worthless, and hopeless. These are some of the symptoms of depression. These symptoms may also be accompanied by feelings of anxiety, panic, extreme fear, and other strong emotions.

    In extreme cases depressed people may even have thoughts of suicide, or they may simply think they would be better off dead. Some depressed people often suffer from the pain of migraines (very severe headaches) or they feel very fatigued (extremely tired, no energy). They also may eventually develop more severe health problems such as heart trouble, stroke, or any number of other problems.

    Collectively market herd would show the similar symptoms collectively and expect or hope the sky falls down accompanied with a obvious anxiety, panic, extreme fear and so on.

    Don't allow you stay in the depression too long

    People who are depressed also often make poor choices, such as spending too much money, isolating themselves, drinking too much alcohol, no interest any more on what they were extremely interested matter, and so on.

    There are some of the ways you could use to overcome depression. If you are depressed you could join exercise groups or participate in team sports. A lot of depressed people in IT bust and GFC who have defeated depression by tapping into their creativity and expressing themselves through music, painting, writing, dance, or any number of artistic activities.

    Some people who are depressed also are prescribed antidepressants or they will change their diets. Other people will put on soft, soothing music or they will search for a new job that they like.

    There are many different forms of depression

    The reason why there are so many different forms of treatment for depression is because there are quite a few different types of depression. Also, each type of depression hits a person differently than others, at different degrees.

    One example of two different kinds of depression is that of bipolar and unipolar depression. Those with bipolar may experience extreme highs and extreme lows and those with unipolar may experience a moderately low mood most of the time (a.k.a. clinical depression).

    Seasonal depression has been mentioned in this article as well. This is a type of low mood and low energy problem that hits people during certain times of the year. People with seasonal depression are particularly depressed during the winter months, and this type of depression is often treated differently than other types.

    Any amount of self-improvement that a person does to help relieve depression symptoms can make a person feel more worthy. For many people, depression can be defeated without drugs or expensive psychoanalysis.


    Depression could be serious problem for anyone in the market if he loses too much. Money is not all but if you lose it you would be affected based on how much you lose!

    In this sense, you need to be careful and never let you lose too much, which would depress you without matter who you are, how genius you think you are, and how well your system works! Market don't take anyone as captives but put you into your own jail to suffer!

    Depression is a critical situation

    Depression is a critical situation that can incapacitate a individual. Severely depressed individual is unable to expertise feelings of joy and pleasure. If you stay in the market long enough, you would know how it is true.

    The construction of the neuronal networks in the brain of a depressed man or woman has been altered as a consequence of prolonged exposure to stress and unfavorable thoughts. In the brain of a depressed particular person the concentration of specific critical neurotransmitters has been altered. This alteration at some point prospects to structural modifications in the brain.

    Depression develops as a consequence of these structural alterations. In order to recover from depression these structural adjustments in the brain should be reversed.

    Generally saying market herd usually shows the symptom of bipolar disorder. It could be euphoric or depressed. To avoid you suffer the bipolar disorder, if you just long in the market you need not to be in the market from being thrilled when the market in its booming time and never do bottom fishing in the dip without big enough margin of safety!

    Do remember all of euphoric disorder caused by greed and over-optimism. Once you are in euphoric disorder, it usually is unavoidable you would be fearful into depression. So be alerted if you are greedy and over-optimism. A few pennies profit could lure you into the hell if you don't have the buffer or margin of safety in your market playing.

    Do remember all of us could win some pennies in market booming time. However you have to be alerted by any feeling such as exciting, thrilling, and euphoria, which is the time you should collect your chips from the table and go away.

    If you lose your shirts a few times in the market, as human it is hard for you not to be depressed.
    Last edited by a moderator: 8th Jul, 2011
  10. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    How couldn't we put us on the fire in market?

    It is terrible for anyone to be burnt on fire. It is terrible for anyone to lose the shirts in sale on fire. No one enjoys the self-burning on fire. But in the market we seemingly are very hard to escape the self-burning.

    Could you say you enjoy the self-burning?

    No one would say we enjoy anxiety, fear, panic, and sale on fire, don't we? We really don't want that is why we are in denial, panic selling, and capitulation. We hate all of these negative sensation. That is why we have made so many systems and stop-losses gimmicks and have so many theories in trading and investing.

    The problem is we all have ever in the anxiety, fear, capitulation, or depression in our market war, and desperately burnt the money on fire. Too many of veterans in the market sadly and silently have left after they could not get their gut and affordable money for their financial freedom.

    War is for collective victory by consumption of warriors naturally

    In the market war, if you were the warriors, you would lose and lose completely without supplies of the necessities from the war. Who could fight bravely without butters and milks for a month in the war? Psychologically and biologically it is impossible!

    However few know this simple logic and some who know it, but fail to be sure to prevent the supplies of the necessities! Most of market warriors are behaved citizens in a peaceful society. They get used in the offices and workshops for their hole-digging types of jobs and then when they come to the market, they tend to behave as in their offices and workshops.

    War is for collective victory by consumption of the resources including warriors.

    Market is a war place but you have options not to be warriors

    Fortunately, market war is not a compulsory war. Unfortunately most of warriors don't understand it is a war place and when the greed and fear take the charge for their activities in the market they are the warriors when they don't know!

    Why do you join the herd of warriors if you ask any shirt-loser(weeping in soul and no tears shed any more in depression without matter genius or bums)? They would jump up to protect themselves more aggressively than to protect their shirts. They deny they are the warriors. They hate you since you imply they are member of the herd. They come to the market for freedom in finance. They know it but only it! They join the war and fight desperately for the losses as volunteers! It is their option!

    However it is the option for losers! There are a lot of options in this market war place!

    Do you know other options? Would you like to know other options? Would you like to put the time to understand other options? Not any option naturally even it is distinctive option as a warrior in the war place!

    Choose your options wisely and know how

    Before you choose your options, you need some wisdom and your goals. How could you be wise? Raise the right questions for yourselves!

    Do you know what is the war and its consequences?

    Do you know you could choose the time, position, resource allocation, mode and sentiment to be involve, and all what you do in this war place allows?

    Would you like to be warriors? If not whom would you like to be?

    Be aware and wise

    You need to know the environment, the participants of the war, the psychology of the inexperienced warriors, the rules and principles to be sure for your necessities, whom you are, and what's your personal traits and behavior, how to harness your behaviors for what you would like to be, and form your road map for enjoyment and happiness in long term.

    You have to prepare the war for your life since it has been there since we can trade for food and necessities!

    Have you questioned yourselves such as is anything missed which you should know but you don't know? Generally saying all of true warriors start their dying road since something they don't know but they assume they know. All of untrained warriors start their first step to the hell with the hope and over-optimism!

    Want to profit in the war? Ask yourself a lot of basic questions first for the war place! The tech and system is too complex to be useful and helpful before you know whom you are and where you are! Do you agree?

    Wdongli's Blog
    Last edited by a moderator: 8th Jul, 2011