Welcome ... Day Trade The SPY Live with Market Trader Tao

The Market Trader Tao
NeboXian's Day trading journal
is updated live during NYSE market open with observations , technical analysis and trades as they happen.
Log in early and follow along.
Click Here
**under construction**

________________________________________________________
Showing posts with label Commentary. Show all posts
Showing posts with label Commentary. Show all posts

Saturday, August 25, 2007

Commentary four

"When Nothing becomes visible an Idea is revealed".
NeboXian


This thought embodies the concept of creation and intelligent design.
That which is seen exists because of that which is not seen..

A great company begins as nothing (no thing) but with an idea. Through recognition of a need (not seen), the evolution of events and decisions by the creator(intelligent), a deign is born (seen).

Once the idea has life and physical form, this new symbol of hope is thrown in to life's Calderon and the concept of social and economic Darwinism comes in to play....the new idea must find a way to survive, adapt and become accepted by the world.

The new idea has a very long way to go before it can be come a worthy investment opportunity and offered to the public as a share of stock.
Most ideas must have a driving force and a committed creator to survive the very long development process.

Many times the Idea is good but the creator doesn't have the confidence, willpower or resources to follow through . The idea will either be abandoned to die or another believer will step in to help. These are called Angles.

It takes much more than money for this new infant to survive...but with out sufficient capital chances are slim.

This is where the first internal battle begins and can become a huge distraction.

The creator is the visionary and artist or technocrat of the big idea. He quickly begins to make the false equation of running the business and maintaining control with administrating the every day activities required to grow the arms and legs of the distribution process....

The crucial part of any success is learning your true passion and recognising there are others who are passionate about the things you are not.....the willingness to let "it" go to others who can do "it" better is the key to success.....

Three words come into play here are inclusion, involvement, commitment and , oh yes, we can't forget the very very very most important word is communication...Once this is mastered, even a mediocre idea can be successful....

I happen to believe that if God created the world, then the Devil is in the administration department.and pastors were sent to reconcile the two...

The giving up of control in areas of life can be very liberating...it can allow you to grow your passion.


We all desire to do the best we can . We become the best we can be by helping and allowing others to be the best they can be.

Basically people come in Three flavors

1. Artist...visionaries.....Cheerleaders ...Band ..
2. Counselors....coach .....trainers
3. Actionaries... doers .....players.... ticket, popcorn and hot dog vendors.....

Put it all together.....you got a High School Football Game....
______________________________________________________

The Fourth Constant Market Trader Tao

If you want to have more of life .....be willing to accept a loss and give it away emotionally..

"The Market will Always Reverse Direction. The trader will always lose
money.
Therefore, the wise trader always determines the limits of loss before the
reversal arrives."


NeboXian

Saturday, August 18, 2007

Commentary 3

Learning the fundamental and technical aspects of the market is a matter of applying oneself and acquiring the language of the market. Consider a trip to China. You'll need to learn the language.
The technicals can be learned and mastered in a reasonable amount of time.

"The hardest thing to learn is control of our nature.
The desire to have more must be disciplined by knowing when the cup is full.

The easy part is the knowing when to act .

The hardest part is to act on this knowledge"
NeboXian



....The Single emotion in human nature hardest to ignore and easiest to manage is Fear.

The fear of failure.

The fear of pain.

The fear of rejection.

The fear of loss....

To take the idea of wandering through life, trying to avoid everything we are afraid of, seems impossible...


The opposite side of the same emotion is desire...the desire to have that which we love, want or need.

These two Emotional drives have started wars and conquered nations. Desire and fear have caused people to steal, argue and fight with those whom the possibility of a favorable outcome would , by others, be perceived as astronomical ...

While there are many tangents and manifestations of these basic emotional states , fear and desire , let's keep it simple for now. They are in fact rather generic terms.

There is also a third behavior. The act of staying to long...holding on and not letting go...choice ...free will....to do or not to do....we'll just call it Greed.

The word "greed" has a negative bias which denotes irrational behavior while the word "passion" portrays a more positive motive and may be a good substitute. At this point ,we are going to learn to manage our fear ,so the word greed works better.

While the degree of Fear and desire provide the emotional momentum to propel us to to a certain behavior, it's greed which produces the inertia to hold us in our position.

Most times our Desires lead us into a potentially dangerous situation which looks safe in the beginning or we wouldn't have entered in the first place.....we are creatures of resistance and support....once our desires overcome our natural resistance, we will enter the new position and use that point of reference as a sense of support... now we are comfortable and as with any dangerous activity it all boils down to your planning. When things start to become unstable , it is very important to have a predetermined safety plan. The decision is made in advance to execute the plan when the environment reaches the preplanned limits.

When you recognise the warning signs and ignore the plan, you are making a choice which is biased by the desire to be right . We begin to experience greed. Now greed will override rational thinking and the only thing which makes us snap out of "it" is FEAR... Suddenly, you realise things are turning very bad. Panic setts in, and more bad choices are made . The safety plan is no longer relevant because the situation is beyond the possibility of a favorable outcome. The technical name for this is Risk Management.

It's all about the things we either don't know or chose to ignore which get traders in trouble. Many traders will argue this point and try to rationalise all this as a Gut Feeling. Until a trader has had some long term experience, he cannot afford to have Gut Feelings. As a rule, if a trader is having "gut feelings " is because he feels something . The odds are, it's either fear or greed... and by then it's to late. .Good planning and staying with the plan will keep the trader out of these emotional account killers...


The Goal of Market Trader Tao is to Guide those ,who want to become more
successful, along a path to understand how to Manage the emotional response
toward the volatility and uncertainty of the trade.

This is not a religious or spiritual blog site but we cannot help but recognise we are spiritual beings having a human experience.

We are all HARDWIRED to believe there is more to the things we cannot see than what we can see. The methods I use are both esoteric and functional.

How is The Market trader Tao used?

The Market Trader Tao lessons are exercises in thought.

Most lessons are only a dozen lines and take a few minutes to read ,but for
some , a life time to learn.

A page of the Market Trader Tao is a tool to invoke reflection and focus.


The more you consider it and apply your personal experience to the passages , the closer you come to see yourself at your level of life. This is a way to train and gain a trust of your subconscious thought.
Have you looked into a holographic picture? The longer you look the more of the picture takes shape. Some of the best ones have images within the images. I'll at times invest 2 or 3 days thinking about a single page. I take notes ..and give my mind time to sort and compile ...and then write down and consolidate my impressions.

Our minds don't work well when asked to think in general terms ....the mind is more like a guided missile...the more specific the target the better...this the purpose of the Market Trader Tao....It's a mind tool to help pull your thought into a focus....the trader will discover these constant truths locked up in their life are reaffirmed through the study of Market Trader Tao....you will also find, most lessons will translate to all life experiences.


The first constant Market Trader Tao (way)


The Market exists to make Money...........for somebody.
The trader has the desire to make money .... for himself.


Therefore , the market exists for the trader to make money.



The Second constant Market Trader Tao

The Market will continue to preform the same as it always has.
The Market Trader fears the potential of loss.

Therefore, the trader can manage fear of market performance .



The Third Constant Market Trader Tao

The Market momentum will determine the trend direction.
The Trader is motivated by the the greater of desire or fear.

Therefore, the trader dose nothing when the trend direction cannot be seen.


The Fourth Constant Market Trader Tao

The Market will Always Reverse Direction.
The trader will always lose money.

Therefore, the trader always determines the limits of loss before the reversal arrives.


A final thought :

When faced with a choice of getting out a little to early or waiting to long to get out.
Ask yourself this Question.....which will make you feel worse at the end of the day?


Missing out on making more ?
or
Wishing you hadn't lost so much?

NeboXian

Friday, August 10, 2007

Commentary lesson 1 and 2

The nature of a Stock is much like most thing in our universe.

A force of nature is something which will happen and there is nothing one can do but attempt to be on the right side of the movement.

A wild creature( like stock) really doesn't care if you exist until you grab hold of it (put money in) . Then and only then, do we truly begin to learn the nature of the thing. It has a way of holding your attention. We also begain to learn some new things about ourselves ...

Stock assumes a Nature just like all other living, breathing things.

A Stock is the monietization of Human Nature. You can witness the whole spectrum of human emotion...the two most extreme are desire and fear...Some times, Stock acts like a mighty Bison in a winter blizzard out on the open range ,completely oblivious to to the freezing wind and snow. Other times it's like a flock of a zillion pigeons ,spooked by every moving thing...

Most times , I think of tracking a particular species of stock much like I would hunt a Mountain Lion or Deer. To observe a potential Quarry , one must first decide what type of prey you want to track.

.. make a list

...where dose it range
....When dose it spawn
....what weather conditions are best
... is it heavily hunted
....is the population plentiful
...is it an ant or an elephant and what kind
....Are there maps of the terrain
....once you find your prey , what is your goal
....dose it migrate up and down the mountain or dose it stay in a territory
...what is the mode of capture and /or containment
..when do you want to make your catch
...in the valley
....going up the mountain
...on top
...or going back down
...how long are you to hold
....when are you going to release
....how much will be invested
.....how much return is expected
....what is the risk vs reward
....an I mentally and physically prepared for the journey

....sounds like a lot of stuff right?


I know what a Mountain Lion is and I also know it can be dangerous. Somehow, I have always known I should be afraid of this animal. Learning all I can allows me to Manage this fear to a very healthy respect for the Lion's potential.

Well if this is all bewildering to you, let's just go to the grocery store ....every one of these questions apply ....even if you are after a Box of water.

Oh...I see ...you would rather go fishing....what kind of fish...boat?pole?bate?
etc....Check the weather, almanac..fishing report news....season...limit..local fisherman tails
...are you gonna sell them , eat them or catch and release (that's called practice)

Now, let's use some common sense here. There are thousands of companies.

Where do you start?

Well first let's start with the point of view . There are at least 12 great companies in any category you pick. so.. walk through the house , office, mall, factory, restaurant or parking lot and pick two items in which you have an interest.
It is best to identify completely different market sectors ....make sure it is something you enjoy, like and something you could see your self devoting your life to..

WHAT? .....You say you want to invest your money into something you don't care about?
People who own and run companies devote a large portion of their life , time, education and money becoming an informed expert in their industry....Look.. Once you know your industry, you will feel free to move your money from one company to the next depending on the market conditions.

You will learn and know when the various herds of bison are in the valleys or moving up the mountains...you do know, they... uh.....won't stay in the mountains all season?


The herd will go down to the valley and stay there a while then migrate to the foothills. They will deal with a few range fires, get spooked by wolves and sometimes run back toward the valley. But, their nature eventually forces them to migrate back to the mountain...every single stock dose exactly the same thing to one degree or another..

There is one more thing you'll need to know.

....Money is made by someone in every market direction...this is important .

Let's say you buy a herd of buffalo.

..now your money will be made when the herd gets to the top of the mountain ...your going to sell them to someone who makes their money taking the herd back down to the valley.

so when do you want to buy the herd?
1 . going down?
2. in the valley
3. in the foot hills
4. at the top?
5. is it spring or winter?

.....this is called identifying the trend and getting on the right side of Nature (the trade)

....oh ya ...Did I mention there will be a helicopter waiting to take you down to a new valley of your choice so you can buy another herd to take up a other mountain....could be water Buffalo in China on this trip....next season it will be Buffalo in Wyoming....it doesn't matter. There is always a new herd ready to go up the mountain somewhere in the world.

you also discovered something about the nature of this type of creature....
1. it feeds it self
2. it reproduces by it self
3 .it protects it self
4. it knows how to survive weather , wolves and bad news ,
5. when the herd starts to move up the mountain.. IT WILL GO! up the mountain and it knows where it is going and how to get there.

....so what did you do?
....your job was to stay with the herd until you sell it to that guy on top!...

.we're not done
.
...you're going to meet some people alone the way up....some one's gonna tell you the herd is ugly, noisy and smelly... the next guy will notice the herd has stopped "it's just standing around eating grass and getting fat!.....then you run into some careless campers who start a grass fire and spooks the heard ......with all the smoke the news paper guy finds you and says "how will you ever get to the top at this rate ? Oh buy the way, did you hear about the buffalo trader who died last week? Aren't you concerned there won't be a market for your heard once you get to the top?"

Now your beginning to think, this Buffalo trip might be a bad idea..

The next morning a industry Analysis flys in and downgrades your heard because they don't think the winter coat growth is progressing well and mutters something about possible Stress on the Herd ......oh Boy!....you can feel the money pouring out of you pockets.....but you hang on....

Now what!...The herd is head'n the wrong way! It's heading for the river...


You turn on the radio...the Government Expert says "we had storms in the mountains... the rivers will be really really hiiiigh."...oh my God you think, the herd is going to drown!

Along the trail there's a sign posted on a tree. It says .....Old Mule Skinner in a shack by the falls....has gold for Buffalo .....you might talk him into tak'n that suicidal herd off your hands before they end up in the river.....it won't be as much as you paid but if they all drown ....then what will you have.?

"That river really looks scary", says the old Mule Skinner . "I can take em off yer hands now if yer like . I'll gve ya gold.....or if'n you don't want to sell ... I've seed this herd come through these parts fer the past 20 years. Fer a fee I ken tell the leed Bul to wate t'll the river git's down.....but that dosen't gar'ntee he'll list'n..."

Now it's late and your tired . What are you gona do now?
When you wake the next morning, the whole heard is gone! You run to the edge of the water and see the herd grazing in the sunshine on the other side!
As you cross the river, Mule Skinner hollers ," watch out! The wolves are in the big trees!"

The herd .....they knew exactly how to cross that river.....

So....what did all these other people know that you didn't? Well I'll tell ya .....Those people knew the chances were very good you didn't take time to learn the nature of the herd and they either tried to exploit your natural fear or inadvertently encouraged your natural insecurities.....

Market Trader Tao Says..... "A Trader goes about doing nothing when the boundaries cannot be seen.....thousands will say with out ceasing ...but the trader owns the results . "


NeboXian