Monday, May 28, 2007

Reading for the Long Weekend

* A Look Beneath the Market Surface - The updated Trading Psychology Weblog reviews markets, indicators, and money flows and takes a glance at the week ahead.

* Trader Coaching Project - I'll take on one trader for a month free of charge and we'll document the process on this blog. Details are on the Trader Performance page.

* Andrew Lo on Trading Psychology - Great post from the Daily Speculations site on Dr. Lo's Adaptive Market Hypothesis.

* Interesting New Charting Application - Stock Spy integrates RSS feeds directly into the charts, so you see the news and the buzz along with price, volume, and indicators.

* Margin Debt Exploding - David Korn, in his excellent newsletter, notes that, since August, margin debt has increased at a 67% annual clip. He also notes that money continues to flow into domestic and international equity funds.

* Breaking Bad Habits - Practical advice from Dr. Bruce Hong, who stresses the importance of self observation.

* Is Directional Trading the Way to Go? - Matt at C++ trader provides a thoughtful perspective on directional and non-directional trading for retail traders.

* Oil Stocks Worth a Look - I recently noted the huge money flows into energy issues. This Seeking Alpha post reports on seven issues to consider for ownership.

* Alternative Energy - InvesLogic aggregates feeds from a variety of blogs in the alternative energy space. Excellent way to generate ideas, track trends.

* Memorial Day Linkfest - The Big Picture reviews the economy and markets, including a look at the fastest growing tech firms.

2 comments:

Trader Musings said...

For those interested, found one of Dr. Lo's papers on "The Adaptive Markets Hypothesis": http://web.mit.edu/alo/www/Papers/JPM2004.pdf

While reading about and seeing the "White/Black Shirt Test", I was reminded of one of my weaknesses in trading. I do have a tendency to focus either on the White shirt or Black shirt and not seeing the Gorilla. One of my projects is understand that in any moment in time,there is always a degree of bullishness (White Shirt) and bearishness (Black Shirt) mixed with a subtle underlying market dynamic (Gorilla) that suggest a possible market reversal in the near future.

The trick is to train yourself to see what both the White and Black shirts are doing at any given time and to watch for that Gorilla that might upset present market dynamics.

On top of that, realize that emotions should not be dampened, but focused toward creatively finding ways to understand what directional bias the markets are trying to achieve in the near future, and to place positions in that directional bias. In a sense, it is the ability to understand and capitalize on the emotional tendency of the market.

The ultimate goal is to move up the market food chain and become the market carnivore, rather than being the prey that other carnivores are trying to devour.

Charles

Brett Steenbarger, Ph.D. said...

Hi Charles,

Thanks for the link and especially for your insightful comment regarding the role of emotions in seeing market gorillas. Experienced psychologists learn to use their own emotional reactions as information; I think the same is true of excellent traders.

Brett