Trading How to make chances while becoming wiser?

It is terrible we become matured which usually happens with the loss of gut and passion. It is excited while we tread carefully in the ruins without losing the shirts or at least strong enough to refuse burn the money on fire.

However we do need the gut and passion; we do need to avoid the fears about the crashes and ruins since we hold our position. Yes we didn't make a terrible mistake to close our business in GFC and the crash which last for about one year. We have to admit we make the mistakes first if we have to think about whether or not selling on the fire.

Every great business needs good human resource management. Unfortunately most of market players don't have any ideas how to manage their human resources. Actually most of them abuse their own human resources, such as feeling, knowledge, data base of internet, and their own mental world.

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It is common in the market that the human resource of individuals is mismanaged. Actually each individual has very little human resources, his mind and very limited capital even after leveraged greatly.

How could we use our own human resources properly? In the scarce of our own human resources, we are compressed to find short cuts to the profit we really are not deserved. I was very lucky to have three years' resources to be a full-time market students but since the background I still could not update my mind to the level to get the living let alone the fortune.

It was the crash in last one year forced me to think about myself and how to manage my own human resources and then I could use external resources for what I want.

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To use the internal and external resources effectively and profitably we have to update our own mental framework and then we could manage the human resources.

However I have nothing with the human resource management even in conventional standard. In home I have a boss. In office I have boss too. In the market I could not act as a boss even I tried very hard to be a boss for myself.

What difference between the boss and followers? Could we google and then become bosses? Seriously saying I googled for years before 2002 but I always acted the followers in the crowd. Why? I was locked in the tech box too long and then the wall of the box become barriers for me to be my own boss.

Too many market players are followers but pretend they are their own bosses in the market. They could not make good service to the crowd as the business services the public good enough for profit.

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Fortunately I have put one toe out of my box which let me painful about myself after I lost too much paper profit again, $180,000 in last year. I knew it was not caused by anything and anyone else but myself. It also have made me very happy since I haven't tried to blame and curse anything and anyone else.

If IT bust, 4 years reading for mind change, and the losing of $400,000 paper profit let me know the margin of safety and the importance of life logic and common senses. the crashing in last year and the losing of $180,000 paper profit let me know it is the primary instincts and my past experiences made the behavior which repeat to make the points for me to lose. The years-efforts for updating my mind let me know where I really lose in my mind.

It was the time to see how to use the logic and common sense and know more about business management rather than just believing financial statement is all! We have to prevent the bad buying and stop the holding due to our human errors. Losses are the consequences. The mind is the cause to win or lose.

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Engineering is a complicated process which is to facilitate human's life. It has some rules and management systems to manage the chances and risks.

I never dare to do any work if it has the risk to fail in operation or making benefit. I could intentionally put more attention on these rules and systems and learn to use them in the market for a fail-safe market playing.

If you worry what you do would damage anything and anyone fatally, don't do it! Losing $180,000 paper profit is not fatal but bad enough. Something wrong, isn't it? Something wrong if we just make losses, isn't it?

Too many of us could say some big words such as you have to be disciplined, analytical, and self-reliant but they never try to be so. Don't just copy and paste in the market which never work!

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We need to lead, communicate, negotiate, and interrogate to set up the management system and make the business profitable.

Do we play the part to lead, communicate, negotiate, and interrogate in ourselves so that we could set up a new mental management system and make our market business profitable?

Could we get enough money base on our trustful mental framework so that we could delegate, motivate, coach, and mentor our own teams for the good enough return?

Could we have the chances to build team, deal with conflict, and then pay others for the team goals rather than try to get a group of members of the crowd here or there for nothing?

All need us to update our mental framework, which make whom we are!

 

Two things about the risks

There are risks to do anything in our life and everyone in the market seems know it. What is the risk for a market players? How do we need to deal with the risks?

There are different definitions about risks. Someone believe it is very risky of the EU debt crisis. In my view the risk is about the probability to lose the unaffordable money: a>. the probability to lose the money b>. the unaffordable money to be lost. If you have only 20% chances to lose your venture money(about 3% of your total asset), it is a risk you should accept. Money from the risk with low probability and you could afford.

All of risks in this definition must be evaluated based on the historical data for long enough time but should not too long, which generally is referred to the historical means for 2 - 3 years. It is because life is short and it is not acceptable we lose most of our portfolio in the coming 10 years.

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This is about qualitative risk analysis and we should know it requires accurate and unbiased data and enough knowledge to know the value are roughly right in the coming years. The evaluation involves the followings:

1. extent of understanding of the risk
2. data available about the risk
3. quality of the data
4. reliability and integrity of the data.

If any items above are not accurate enough, there are little helps for the risk management and quite possible we could be hurt terribly. It should be evident but most of market players don't have the time and disciples to get what they should get.

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In a lot of situation we just could not get accurate data but the above could give us some sense how to see the risks and chances with the risks. Risk management actually is to to avoid the risks but how to control the consequences if they happen.

We tend to deal with the jobs normally. We are lack the education and training to deal with the risks. We tend to focus on what we are doing but not the consequences.

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We have to learn how to analyze for decision based on the probability and impact. Have you heard Monte Carlo Simulation? It is a technique to process the risks in the way as followings:

1. determine the probability of achieving a specific return
2. quantify the risk exposure of your capital, and determine the size of the cost and schedule contingency reserve that may be needed.
3. identify risks requiring the most attention by quantifying their relative contribution to your capital
4. identify realistic and achievable cost, profit, schedule or time period,or scope of targeted return.

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Generally you have to do qualitative risk analysis first. It requires risk identification. You have to think about the time and budget availability and the need for conclusions about the risks and impacts.

Most of time we don't know what we should know and we don't know how to protect ourselves from the bad consequences of what we don't know! We always feel we know a lot until market wipe us away.

The problems to most of losers are they don't have the courage to admit their own mistakes, over optimistic when they should be very fearful or over fearful when they should be very cheerful! To them if you talk about risks and admit your own failure you are schizophrenic!

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Could you enjoy the symptoms of schizophrenics in the eye of the crowd? It is courage and gut since it means you would not be popular among your mates. Good news is I don't look after the popularity anymore if I know the popularity cost too much!

Risks are the sources to fear. It is useless to know the risks and consequences if we don't prepare to response to the risks properly. Have you heard about risk response planning? Have you heard the chances come to the prepared hands only?

All of these planning are the process of developing options and determines actions to enhance your chances and reduce the threat to your capitals. It includes to build your corners when all are in the ruins, identification and assignment of capital or resources for your last defensive line, or start to get your defensive line. You have to learn to be response for yourself and then you could be self-reliant.

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Risk response planning must be appropriate to the severity of the risk, cost effective in meeting the challenge, timely to be successful, realistic within the market context, agreed by most of cells in your brains, and tried to be a responsible person rather than blaming and cursing.

You have to prepare to select the best risk response from several options! How many options do you have? We need to get a intuition about the risks which could drive us away from the market even we don't sit at the sideline to cry in the ruins.

You have to win over your primary instincts even you could be seen as a mad by the crowd. I have made a lot of mistakes but I am happy I have the courage to build my last defensive line.

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Could we get the option to avoid the unaffordable risks? Could we transfer the unaffordable risks to the chances with the affordable risks? Could we mitigate the consequences by using the plan so that we could say we have the risks we could accept?

1. What is the residual risks for your action?
2. Do you know what is the secondary risks from your action?
3. Do you have contingency reserve which could support your in the worst case?
4. Do you have the plan to harvest when you can?
5. Do you know your intuition comes from inverting and wise and intelligent behavior?

Wonder what if I know all of these in IT booming time with $400,000 paper profit! I don't regret for my mistakes anymore but I do really hope the payment could give me the lessons I need.

 

Dirt cheap fish

http://i.imgur.com/MqYiI.gif

 

Actually it doesn't matter for what you get if it is not what you can digest. It is a example you could be very painful. Please see this video and make your mind to think seriously about the probable and possible consequences for unaffordable risks.

What's the dirty cheap fishes in your definition? What's the price range in normal or extreme time? What's the probability to damage your stomach? What's your plan for emergence? Who is your doctor to save you or could you save yourself?

Dirty-cheap fish doesn't just make your stomach painful but it could be very delicious for the minds who know chances are about the selection. Do you know how could you select a better choices in shopping center? The skill and knowledge about them, yourself, market sentiment, and your risk management work together to let you happy or painful from fishes or swans.

You are very smart but always have little strategic thinking and philosophic view about life, market, and dirty cheap fishes. You want to be right but never know a illogical and insane minds would be crazy for anything they play. It is the reason why you google so hard and still could not stop your crying when you should not. I did the same just a few years ago. Everyone needs the time to mature.

Do hope you could play the swan properly with good risk management. The swan could be deserted by the market too. I believe you agree with this views, otherwise you have not got any lessons from the crashes in the market with heavy payment.

 

Could you digest what you want?

Actually it doesn't matter for what you get if it is not what you can digest. It is a example you could be very painful. Please see this video and make your mind to think seriously about the probable and possible consequences for unaffordable risks.

What's the dirty cheap fishes in your definition? What's the price range in normal or extreme time? What's the probability to damage your stomach? What's your plan for emergence? Who is your doctor to save you or could you save yourself?

Dirty-cheap fish doesn't just make your stomach painful but it could be very delicious for the minds who know chances are about the selection. Do you know how could you select a better choices in shopping center? The skill and knowledge about them, yourself, market sentiment, and your risk management work together to let you happy or painful from fishes or swans.

You are very smart but always have little strategic thinking and philosophic view about life, market, and dirty cheap fishes. You want to be right but never know a illogical and insane minds would be crazy for anything they play. It is the reason why you google so hard and still could not stop your crying when you should not. I did the same just a few years ago. Everyone needs the time to mature.

Do hope you could play the swan properly with good risk management. The swan could be deserted by the market too under some conditions. I believe you agree with this views, otherwise you have not got any lessons from the crashes in the market with heavy payment. A man who could not be taught are worse since he would be useless in the ever changed market.

 

It is really funny that a self-believed wise man uses the ladies to save himself in the market.

Could you?

Why don't you google among the pornographic websites for your way in the market? It seems very helpful for your primary instincts but very risky for the money.

Do you know it?

Do hope you know it very well. Today you let me very disappointed and worry about you, haha.

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Damned, it is too hard not to follow our primary instincts.

So that I am happy I could be so calm and understandable for your reactions. It is a milestone of my efforts to update my minds

Good mental framework is powerful even it could not increase our IQ.

It is to open the eye, invert what we see, choose, and tolerant without losing independence.

I really enjoy what I do in my mind updating. It works evolutionarily! It would give me a self-reliant way!

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Have you forgot what you got from your googling: disciplines, analysis, and self-reliance, the basic elements for success in the market? Do you know the difficulties to rebuild your mental framework without facilities or luxuries to demolish the old one first and build a new one?

It would confuse us until we pass some threshold for the necessary knowledge, skills, wisdom, and behavior protectively and intelligently. If you don't know the difficulties you would not have the motivation to get it done.

Googling them again and read words by words for using them for profit rather than twisting words, which will light your way! I could go so far since I read for using in the market.

The absence of a rigorous mental framework can lead to discrepancies between the desired functionality, integrity, and what is achievable in actual operation of the market.

 

Know something to manage the risks for profit

Have you experiences to manage risks? Do you have the general ideas what the risk management is about? Market itself would not provide any protection for anyone. Logic and common senses in market is about get the profit safely!

In general, risk management is to

1. Establish risk criteria and risk management philosophy.

When we say it is simple for safety: stopping the losses, it translates that we really don't have ideas about risk criteria and the management philosophy.

2. Criteria and philosophy themselves don't increase or decrease the risks.

Swans would fall down in crash. Dirty-cheap fishes could shoot up. Few of market players can control their performances when they could not get into the board.

You have to verify your activities and associated rules, principles, and procedure are in alignment with this philosophy and criteria. How about if you could not do so? It is your tasks and jobs and you have to dance to work for them even some would say you are mad.

3. Verify competence of your responsibility to get profit safely.

4. Verify that your behavior and actions of are consistent with a mental framework that encourages continuous improvement of your mental framework and then your profit.

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To be the risk manager of yourselves.

1. Establishing safe and reliable operation should be as a priority and providing the resources, tools and training required to get the job done.

2. Successful execution requires decision criteria be clearly stated and consistently followed.

3. For efficient implementation, these criteria should be embedded into each cell of your brain and operational phase so that safety and reliability issues are considered a normal part of doing business in the market.

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The basic requirements of a risk manager are:

1. Understand your individual full responsibility and authority to manage the risks for profits, not anyone else.

2. Understand the risks criteria as owner/operator and how it is applied in your market playing

3. Consistently apply internal practices related to safe and reliable buying, holding, and profitable selling.

4. Do what is right (even if it requires changing the way things are done now or very upset yourself).

5. Dance to work for the competency and necessary resources to accomplish your safety and profit responsibilities.

6. Understand the boundaries of acceptable operation and integrity for your safe operation in the market.

Could you take your responsibility? Few could in the market among the retail market players since they tend to be managed by the feeling and crowd sentiment.

 

Human errors are the causes but...

Someone once said "listing...human error as the cause of an accident is about as helpful as listing gravity as the cause of a fall. It may be true, but it does not lead to constructive action." There are few key words about an accident: human errors and constructive action.

We all know we lose the money because we have made some human errors but most of market players have not the capabilities to get their own minds for any constructive actions. When quick money becomes preferences, least effort ways or methodologies become popular, which result in accidents or disasters. It seems all of retail market players have the experiences to lose the shirts and they never think they are the causes to lose the shirts.

Have you though how to avoid human errors or correct human errors or leave rooms for your human errors so that you could make profit without accidents? It needs constructive mental framework for constructive actions from the constructive behaviors.

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It should be recognized that given the right conditions all things succumb to human error, such as:
• Hazard is not recognized, so it is not managed,
• Hazard is identified but deemed non-credible,
• You buy the shares without time average and diversification so that you could not lower your average cost, and worse you let the cost run.
• You seemingly don't know business at all, make decision without the necessary decision trees for you to choose or rationalize
• Inadequate time to update your minds leads to poor maintenance.

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The internet and computers make the entry threshold to the stock market so low and then the crowd sentiment and its actions on the market let everyone suffers the lighting type of changes and then make all of logic and common senses look useless.

The quick changed environment and scarce of self and environment awareness push most of market players to find the sign what next market would move. The failure to follow the market hurt the market players very much and then logically they tend to shut down in emergence.

When your job just come with the emergence every second or minutes, you tend to escape from any assumed big risks. When you become a runner from risks where could you get your profit? I don't see any hopes for this kind of running could result in good profit let alone the fortune.

 

Do not argue with an idiot.
He will drag you down to his level and beat you with experience.

 

Yes, that is very true especially those who tend to call others idiots.

1. If you are so easy to be beaten down into ruins by an idiot, it is quite possible you are an idiot already even I still don't think you are.
2. I still believe you are very smart but not wise enough. You love the appearance more than what you are inside and what you really get.
3. If you are so easy to be upset with all of bad emotional words, you have the risks to be idiot when the market environments are not what you like to see.

Is it logic that an idiot could drag a wiser into the pool of idiots? Upsetting could destroy the basic capability for very simple logic!

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Idiots usually don't know they are. They don't have the own minds, don't have passions to learn, limited skill to google, and tend to twist the disciplined, analytical, and self-reliant qualities at will.

Is "3 idiots' experience" useful for you to make the profit or a tool to twist the words and let yourself feel super? It needs the gut to give the true answer.

Are you super in the market? How much profit have you got? How do you do to get your profit? Don't just tell me you make losses and stop losses. I really know it very well.

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Tell how you made losses, reduced the losses, get a small profit due to your change of your behavior, the procedures to change your behavior, and now you are very successful to be profitable.

By the way don't tell you have an advanced system without details about it.

Could you? Thank you in advance and really happy you call me an idiot in your current mental status, which warn me how easy we could be idiotic.

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Have you used brainstorms to shock you up? It is very helpful to design a reliable safety instrumented system for mining.

Haha! It is very good excuse for your own failure in the market that the words from idiots make you become an idiot... What's your disciplines, analysis, and self-reliance?

It is amazing and very instructive. Best wishes you would be not an idiot because of anyone who is an idiot!

 

Monkey Business

Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for $10 each.

The villagers seeing that there were many monkeys around, went out to the forest, and started catching them.

The man bought thousands at $10 and as supply started to diminish, the villagers stopped their effort.
He further announced that he would now buy at $20.
This renewed the efforts of the villagers and they started catching monkeys again.

Soon the supply diminished even further and people started going back to their farms.
The offer increased to $25 each and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!

The man now announced that he would buy monkeys at $50!
However, since he had to go to the city on some business, his assistant would now buy on behalf of him.

In the absence of the man, the assistant told the villagers.
"Look at all these monkeys in the big cage that the man has collected.
I will sell them to you at $35 and when the man returns from the city, you can sell them to him for $50 each".

The villagers rounded up with all their savings and bought all the monkeys.
Then they never saw the man nor his assistant, only monkeys everywhere!

And now you know how the stock market works...

 

Who are you? The villagers or the man to sell the monkeys?

Do you really know how much a monkey is based on the demand-supply relationship? If Australia is a monkey loving nation, could the monkey be sold more expensive?

Don't just copy and paste and give words based on the feeling.

You and me need to ask the right questions for right profit target with the understanding the environment.

From profit point of view, the man who could sell the monkeys for profit, know his monkeys, the villagers, and the time to buy, hold, sell and go. He at least solved all of critical issues for a gambler. If you are not familiar with the issues of a gambler, please listen the song "The gambler"

Tell me when you did the similar things to buy, hold, and sell at the right time, right place, right people or villagers, can't you?

I want to sell the monkeys to you! Haha.

Should I stop you to buy? I don't think so if I do want to sell them to you, it is legal, and could make profit! You should be responsible for your actions in the market.

 

I see what you did there.