Market Musings

Back when I was first starting to get into trading and investing I would write alot of musings. I'm still trying to figure out what its all about and how its done. At some point I lost some of the discipline of trading and my portfolio has suffered because of it. I'm going to post some of this stuff in hopes of helping to drill it into my head so I don't suffer from making the same mistakes over and over again.

1/13/2014
    Its always the down days that make you pause and take notice. When everything is going well and you’re making money and doing great, you don’t have a care in the world. Confidence, Charisma, Bravado, Swagger. When you’ve got it all figured out. When every things smooth and going your way; feeling good comes easy.
    I’ve never seen a stock go straight up to infinity. Sooner or later the price action will always be met with resistance. Physics, inertia, momentum. In the market as in life there are two opposing forces. Push/Pull, Up/Down,North/South, Red/Green. These are opposing energies that are and always will be opposite and fight against each other.
    The interesting thing is that although inherently opposite; In and of themselves there is no “good” or “bad.” That is just a human/emotional construct that really depends entirely on your position and outlook. They are just opposing energies. In the market its the Bulls and the Bears. These two groups of people have differences in opinions of where a stocks fair value lays. The market functions on this discrepancy. Every bit of price movement comes from the never ending battle taking place between buyers and sellers to come to an agreeable price.
    As a stock trader, it is my job to recognize when these price fluctuations have gotten to an extreme on either side of the spectrum and take advantage of that volatility to open a position at a better price than I close a position.
    There are many factors that I have to consider before I can determine what is a good price to open a position and what a good price to sell that position would be. Price targets and stop losses can help form a general framework of what to do however, you CAN NOT TELL a stock what its going to do. The stock will tell you. If you are paying attention, oftentimes price action and the order book will help to offer a framework of what it might do and what price it may reach next.
 
  You can never be entirely 100% certain of an outcome. There is no such thing as a ‘sure thing.’
    
    You come into this business with high hopes. Dreams of money, power, women, nice things… These things are obtainable through perseverance. However, to think that these things will just fall into your lap with little effort towards personal growth or mastery of the trade is delusional. Sooner or later, I don’t give a fuck how smart you are, how easily this all comes to you. I don't give a fuck who you are. You are going to run into resistance. Even Kasparov gets beaten.
    Its what comes out of the down days that make the man. Does he give up in panic, frustration, or fear? Does he shut off the world and hide; hoping that it all will resolve itself on its own in due time? Does he double down and leverage up, upping the stakes until his gambles and risk tolerance overtake him into ruin?
       That money is gone. It was there yesterday and now its gone. Poof. vanished into thin air.
    That doesn't mean that you cant make it back. The intelligent man finds, recognizes, and learns from his mistakes. The intelligent man does not repeat the same mistake again. The successful man formulates a strategy, a set of rules that works for him. The successful man creates his own discipline that he abides by and upholds to. The seasoned traders preach trader discipline. This is a marathon and not a sprint.
     A set of almost mechanical rules should be created as a safety net preventing the traders emotions from ruining him. The market runs on emotion. It is this reason why it can be so volatile. Humans are very emotional creatures. Humans especially individuals can be very unpredictable. However humans  especially en masse can also be very predictable. Learning human and market psychology can be very valuable to gaining insight into market movements.