5 когнитивных ошибок, killing your profitability

Джордж Дворский (George Dvorsky) once wrote: “The human brain is capable of performing 10 ^ 16 processes per second, making it a much more powerful tool, than any computer currently in existence. But that doesn't mean, that our brain has no serious limitations. A humble calculator can do calculations a thousand times better, than we, and our memory is often not very useful - yet, мы подвержены когнитивным ошибкам (cognitive biases), these annoying glitches of our thinking, which force you to make dubious decisions and come to erroneous conclusions". Cognitive errors are the bane of portfolio managers, because they reduce our ability to remain emotionally disconnected from money. As history shows, when it comes to investing your own money, investors always do the "opposite", что должны делать. They "buy at the maximum", as greed prevails over logic, and "sell at the minimum", because fear disrupts the decision-making process.

Pair trading: why won't I tell my students about it

A few years ago, a German billionaire started pair trading with two classes of Volkswagen stock.. Ended up, that he threw himself under the train. The strategy of pair trading – buying one stock against selling another within one sector – looks attractive in theory., but can be a real killer of your portfolio. This is how it works: when you trade a stock in a pair, you buy the laggard and sell the overtaker. You bet on reverting to mean. In other words, you think, what share, which performs relatively poorly, over the next period will straighten and overtake that, what worked well. In the oil sector, this could be, for example, Exxon Mobil (XOM) against Royal Dutch (RDS), in the healthcare sector something like GlaxoSmithKline (GSK) against Pfizer (PFE). This is a popular strategy, and opportunities can be easily spotted on the chart, where the ratio of one stock to another is displayed, ie. on a relative chart. Here you see a graph of the consumer goods company Unilever. (UN) against his competitor Procter & Gamble (PG). Это трехлетний

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Webinar: The mistakes of novice traders

If you have recently started stock trading or are just showing interest in this topic, We invite you to the webinar "Mistakes of beginners": how to deal with them". In class, you'll learn about, what mistakes traders make in risk management, how emotions and a bad plan lead to losses, and what to do with all this. The webinar will take place 30 May c 21:00 MSC. Host - Dmitry Gavrilov, трейдер и партнер GT Capital Group. The lesson is free, для участия достаточно перейти по ссылке и авторизоваться в роли гостя. See you on the broadcast!

Hone discipline

During all this trading time, I have made thousands of mistakes., know my strengths and weaknesses. I lack attentiveness, discipline so as not to repeat them. If I can cope with the fact that would not repeat the mistakes, then my results will improve greatly. In most trainings, for breaking the rules, you set yourself some kind of meaningful punishment and I also need to come up with something like that. Yes, the loss of money is already a punishment for making a wrong transaction, but I take it for granted, that you can't get away from the cons, anyway, any plus will cover several negative trades.

Lack of concentration

You can write yourself more 100 rules and trade on them, achieving excellent results, but it is only necessary to violate one as the whole Trading Strategy collapses. You need to be constantly focused and focused when trading, avoiding small mistakes leading to sad results. I don't know how to deal with it yet., After all, I’m a man and my head can get sick, thinking about some problem or just getting tired, a series of mistakes starts to accumulate slowly, resulting in terrible cons.

Mistakes 24 May

Early began to trade reversal, stock with lots of shadows and no signals to enter Bad price and because of this big stop, could not properly sit out his idea Did not transfer the stop to zero although I did more than 20C and there was an opportunity Not correctly evaluated the graphic model, there was more chance of a pullback entered the action with big shadows and dirty movement

Thoughts on 14 May 2010

The previous month was the largest in terms of stock volume., but by the middle of this month exceeded the volume of that month Got used to a large position and because of this relaxed, old problems are back. Less began to think about deals What would make better days , enough to make 2 transactions at 50C For the last 2 made a bunch of mistakes, I don't trade tomorrow, I understand mistakes. I will write a post about what is wrong Now every day I will analyze the deals of the previous day and post them The season of company reports is over, the market abruptly subsided. I'm waiting for the connection of NASDAQ charts To stick to the rule ” If 3 deals in the negative – resting ” . I will write down the result on paper and how I see 3 negative I do not open new deals.

Rule # 1

Do not trade in the first hour, whatever the small positions, no matter what huge money it promises, DO NOT TEAR OFF POSITIONS IN THE FIRST HOUR !!!! P.S. You need to put it in a frame for yourself. )

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