Trading Psychology 101 (PSYCH)

[price_and_volume]

Worthwhile interviews w/ The AlphaMind Podcast's Steven Goldstein:



https://futures.anthonycrudele.com/podcast/453/



https://www.thealphamindpodcast.com/123-steven-goldstein-new-book-mastering-the-mental-game-of-trading/

Why bother listening?

Well, anyone who struggles to make good (money-making) decisions AFTER TRADE ENTRY could do w/ a few reminders.

1. Monetize the trade when able
2. Set & honor Stop Losses
3. Don't ADD TO LOSERS.

GLTA

[PEMBROKE1]

Hi, price_and_volume,

I do agree with a lot of what you say.

You most likely have bought a lot of more stocks than I have.
But on this Message Board I will attack the company, but I do not attack.
the other posters unless they say something negative about me.
even if they are right.
I am retired.
I do enjoy this board.

[price_and_volume]

Thx for the response & engagement.

Your first four statements all seem to me that you are "ASSUMING" to a degree.

EVERY TRADE is an "assumption" - a bet.

The odds are 50/50.

Those odds take into consideration the entry, the individual's trading ability & psychology, the overall market, and the exit.

As mentioned, BREAKOUTS & momentum trading are proven WINNING strategies.

They've been time-tested, back-tested, game-theoried, and written about showing statistical outperformance in many white papers.

Your "efficient market theory" is exactly WHY YOU SHOULD MAKE EVERY ENTRY PROVE ITSELF.

When the market tells you loud and clear that you're WRONG - take the early loss.

You can always re-enter if it turns around, but continuing to RIDE A LOSER INTO OBLIVION based on "personal DD" is foolish.

I think you're old enough and been around the markets long enough to agree.

GL.

[PEMBROKE1]

Hi_price_and_voulume,

Thank you

I read "THE POST"

Your first four statements all seem to me that you are "ASSUMING" to a degree.

Is below basically what you mean when you say, "CHASING THE MARKET."?

Chasing the market refers to entering or exiting an investment with the intention of profiting from an occurring development or trend. It’s synonymous with herd instinct and typically involves buying in at a high price or selling at a low price after a sell-off1.

In other words, when investors or traders chase the market, they’re trying to capitalize on trends that have already been pursued by other investors. However, this strategy is often used in a negative context, as it implies coming into a position too late to fully benefit.

Efficient market theory suggests that financial markets are highly efficient, with new factors influencing prices integrated into valuations in real-time. If markets are truly efficient, chasing the market becomes futile. While some trading strategies, like momentum trading, can succeed in chasing trends, it’s generally more advantageous for retail investors to take a long-term investing approach rather than chasing short-term gains1.

Remember, chasing the market can be like trying to catch a speeding train—it’s often better to focus on long-term goals rather than chasing fleeting trends.

[price_and_volume]

"Confessions of a Market Maker"

I've listened to this podcast for a while.

There are many clueless OTC traders who could learn a thing or two if they made any effort other than chasing the next P & D.

https://twitter.com/marketmakersins

[price_and_volume]

Smart vs Good:

It's said the "idea" is just 10% of the trade.

Position-sizing and risk-management are the other 90%

Lots of very very smart folks invest in stocks. They do deep-dives into filings, talk to management, and google industry-wide trends.

But that shit rarely matters.

Here's a simple method that I know works:

1. Get long on meaningful breakouts. Sell some into run-ups to lower basis & de-risk.

2. If its going down, cut your losses.

We used to say, "I'd rather be lucky than good", but GOOD often beats SMART.

Commit to being a GOOD investor!

make money when its available, and always cut losses.

[price_and_volume]

Food for thought:

https://50in50.substack.com/about

The Trading 'lessons':

https://50in50.substack.com/archive?sort=new

[price_and_volume]

OTC penny-garbage lessons learned while finishing 2022 taxes:

Buying breakouts, monetizing into runs, and dumping them when they turn on you is THE WAY TO MAKE $$ in sub-penny garbage.

If you fall into the trap of believing the hype you read on ihub boards, twitter-pump-posts, discord & telegram penny-pump rooms etc, you'll be the last guy holding bagz!.

Don't be that guy.

These 4th Qtr (Oct-Dec) trades ALL made good money, despite ALL being garbage companies. You can see where they popped on any worthwhile trading scan, and you can see why OTCs need to be monetized asap, and moved-on from.

$ASTA
$CNNA
$HYSR
$ICOA
$RJDG
$SPOM

All garbage, all good money-makers for traders.

DISCIPLINE over CONVICTION. Put that on a sticky on your monitors, right next to LOSERS average LOSERS.

GLTA

[price_and_volume]

Classic: Happens on ihub every day.

This is worth a read.. Read the whole thing.

This occurs EVERY DAY on ihub, but many refuse to accept they're susceptible to being duped.

[price_and_volume]

Assume you're wrong until market proves you right.

The market is ruthless and loves to take money from those who lack trading discipline.

Make every position prove itself.

If the position fails to show due respect, you need to kick it to the curb - you can always re-enter.

"Chasing" is a proven winning strategy. Breakouts are statistically more likely to pay than any other strat - but for them to pay you actually have to exercise some discipline, which means selling some into the run.

[price_and_volume]

NEWS is essentially useless.

Here's a LINK to a great article that shows multiple studies over the years indicate markets move DESPITE (often contrary to) THE NEWS.

Takeaway: You could have news in-advance, and would likely LOSE MONEY if you believe the market is going to respond 'rationally' to that news.

If you can't access the link for some reason let me know and I'll post the entire article here.

Worth a read, just as a reminder, and I'd be happy to discuss it further if anybody cares.

[price_and_volume]

"Losers average losers" more here:

losers average losers We're all familiar w/ this Paul Tudor Jones quote. Some agree, many don't.

I've learned in the OTC penny-scam world, it's best to NOT AVERAGE DOWN, and to protect capital ALWAYS, because clearly most of the tripps & dubbs we all buy into are scams on one level or another.

So I trade them - sometimes in cheap & scale-out into a frenzy, or I wait for a breakout after something has popped-up on my scans.

Futures & Options are different, for different reasons which I'd be happy to discuss if anybody cares.

GL w/ all your trades - don't forget to MONETIZE THEM WHEN ABLE!

[price_and_volume]

Ihub name-change due to imposter.

It was brought to my attention that there is a poster on ST that has the same username that I use on ihub.

I don't post on ST, and that dipshit on ST ain't me.

I don't know if it's a coincidence or the other poster intended to impersonate me or something? No idea, but he was posting on the same stockboard THERE that I post on here.

Weird.

Anyway, I felt compelled to change my username from a famous Delta in Botswana to something more direct.

[price_and_volume]

VERY WORTHWHILE DISCUSSION starting here:

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=159777842

(It's from another board)

[Mithras]

Thank you for putting this together.

[price_and_volume]

Here's a related discussion:

From another board where I participate (the board talks about Market Profile & Market Internals, etc - generally used for trading SP futures)

https://investorshub.advfn.com/boards/read_msgs.aspx?board_id=28275&NextStart=15267&BatchSize=100

If that doesn't work this one will from post 15267 - just a few posts

{ Shadow refers to this guy }

[Mithras]

I think I tend to agree with you. I guess my curiosity lies more in the differences in perception as it is applied to presented opportunity. There seems to be a predominate belief or opinion in trading that pumping is bad but capitalizing is not.

You stated in a recent post that you consciously avoid enticing others into positions you are holding, but you also acknowledge your ability to distinguish and monetize a recognized ‘pump’. So there seems to be a line...or a threshold that you have created. But are the two really indistinguishable?

[SilentWolf]

Mithras, in my opinion, you are a worthy trader if you capitalize on a pump, only if you understand that it is a pump. Novices can't distinguish legitimate demand for a stock and artificial enthusiasm, and usually become bag holders.

[SilentWolf]

You know I couldn't agree more with this quote, "For what purpose? To fool others? What need is there for that?"

Here's my version:

There really is no reason to expend effort fooling other people, when they are perfectly willing to do it to themselves:)

[Mithras]

No, but the suggested alternates make for a very good start to a potential subtitle list.

Let’s stick with the OTC and original intent for now:

1. Developing technical setups
2. Taking positions
3. Monetizing them.

In your trading history have you noticed that the ‘ramps’ you’ve sold into; those where your opinion leaned more toward ‘scam’ (but you could never be certain) presented differently...from a technical standpoint? Were they monetized differently?

Same questions for ‘promotional pumps’.

What determines exit points in these scenarios? Is continued demand for shares a factor? How is demand for shares quantified or anticipated outside of recent volume...Twitter, discord, etc?

I think this is important and worth looking into.

[price_and_volume]

Should I rename the board? "Proselytizing 101"

"Virtue Signalling 101"

"Tilting at Windmills 101"

[price_and_volume]

A 'worthy trader' takes good trades

A 'worthy trader' capitalizes on information presented in the marketplace imo.

In MY CASE, I'm looking for share-demand to drive prices higher - that's my key-setup in stocks. Breakouts.

As a trader, my JOB is to take the trades that meet my criteria.

I've explained that I SELL INTO any ramp I'm lucky-enough to get on, because there's no way for me to KNOW who/what/or why the ramp is ACTUALLY OCCURRING or how long it will last.

Is it a scam? I may have an opinion, but I may be wrong.

Is it going up due to promotional pump? I may have an opinion, but I may be wrong.

Take the trade. Monetize it. Move on when it's over.

Nowhere in that process would a 'worthy' trader IMO add to, or even need to add to, promotion and pump.

For what purpose? To fool others? What need is there for that?

IMO, as you already know, THAT wouldn't be 'worthy' of anyone.

[Mithras]

Is a worthy trader still considered worthy for capitalizing on a demand for shares created by a pump in a scammy stock?

Are indicators or technical set ups different in a ‘pump’ inspired move?

[Mithras]

Plausible deniability...got it. What if you are 95% sure?

Never mind - don’t answer that!

I’d like to thank you both for the discussion(s) this evening. It was my privilege.

Have a good night/day.

[Mithras]

I think that’s very well said, Wolf. And I agree with you.

Two philosophic quotes I have come to value over the years which are strangely applicable to trading - badly paraphrased of course:

“...consequently, there is no truth”

and,

“If the world was not already a perfect place, it would be different”

[price_and_volume]

No, because I'm NOT certain, ever.

Do you feel guilt in selling out of a position or ‘dumping’ when you are certain that the position is destined to lose value in the near or even immediate term?

I have posted & explained my exit-methodology, and I've posted when I've executed it (VRUS, EXROF, BYZN & GMGI boards for example).

See my posts here for an example.

My scale-out exit-posts on VRUS board were abused and labeled 'FUD'. Several were removed by MODs.

Anyway, I don't feel guilt for publishing my honest thoughts when exiting a trade, nor do I believe it has harmed anyone else's account.

Why would it? As I was just instructed on another board, "nothing you say here matters" LOL.

[SilentWolf]

That's a good question Mithras. I'm just speaking for myself; I've never considered myself a pumper or a basher. I comment on stocks I own and sometimes on ones I don't own, but I never try to entice people to buy or sell. I try to stay objective and quote company statistics and facts. When I do make opinion statements, I label them as my opinion. I also never make price per share predictions.

As far as feeling guilty; no I don't feel guilt when I sell and the stock goes down. Like I said, I've been doing this for several years now and I've been on losing side of many trades. I'm pretty sure nobody was feeling guilty for me then.

Guilt, just like falling in love with a stock, fear of losing or missing out, and greed are emotions that don't serve a trader well over the course of a career.

It may sound awful, but I view trading just like a sport, and if you are feeling guilty after winning a game, it doesn't bode well for your future success.

[Mithras]

Wolf, that is an excellent explanation. I think there are a few additional aspects that could be incorporated. In addition to ‘what they want to believe’ there is the equally if not more powerful ‘what they want to achieve’. Dreams are intangible. Separating the investment from the dream is impossible for some.

[Mithras]

Not conflicting - just poorly written. I’m not a great communicator.

Paraphrasing your original post...badly - You do not convince anyone to join you in a position because you would feel guilt if money was lost based on your recommendation.

Do you feel guilt in selling out of a position or ‘dumping’ when you are certain that the position is destined to lose value in the near or even immediate term?

I am not suggesting anything - just asking.

[SilentWolf]

You know that's a pretty darn good mindset to have:) You're taking the contrarian perspective to a whole new level.

The question was asked; why do people pump a stock on the boards? To my thinking, it is sometimes, maybe even often, because they are trying to relieve the cognitive dissonance they have about the stock, especially if it is in a downtrend. There is a tremendous conflict in their mind between reality, what they want to believe, and what they have confirmed to themselves about what is right. By them repeating the same hype over and over, and logging in to see others do the same, they are essentially balancing that conflict in their mind and confirming their bias.

It's why Conservatives watch Fox and Democrats watch CNN; people want to hear, what they already believe.


Thanks for reviving this board!

[price_and_volume]

Thanks Wolf, I appreciate your post.

I have little expertise in the subject OBVIOUSLY, but back in '09 I was part of a futures trading-group who employed a psychologist/trader as a 'trading coach' for a while.

My long-term trading-expertise is in futures, but I've found myself lately discussing OTC stocks, and more specifcally the constant promotion of OTC pennystocks on ihub.

My profile has this as 'my favorite quote': Assume you are wrong until the market proves you right' - that may describe my attempt to fight inherent bias when in a position.

[price_and_volume]

Previous MOD's input:

"Because it is unquantifiable and generally misunderstood by most traders and investors, psychology is the often overlooked intangible aspect of trading. Unlike the precise mathematical formulas used in technical analysis, we cannot easily reduce human behavior to a mathematical equation that can be plotted on a graph as a trend line or as a series of variables that we can examine in detail throughout history."

I left that quote, tho it doesn't exactly resonate with me and I may have misunderstood it.

That's why I made a few opening posts when I joined the board, in an attempt to clarify MY 'trading psychology'.

I may be way off on the whole subject, but I'm happy to continue discussing it.

[SilentWolf]

I love this subject of market psychology. I'm speaking with some experience because I am a clinical therapist and trader for the last 33 years.

When it comes to psychology, I go back to what I first learned in graduate school. You have to understand your own mind, before you can help someone understand his or hers. In other words, if you don't know what thoughts and emotions causes you to behave a certain way, then you are going to have difficulty understanding others.

I spend a lot of my time assessing myself and why I bought a certain stock. I'm always on the lookout for confirmation bias in myself. You see confirmation bias constantly on the boards with longs who have bought a stock, and in spite of overwhelming evidence of its impending failure or ongoing failure, they discount all information that conflicts with their beliefs that it is going to the moon.

[price_and_volume]

It appears these are conflicting arguments.

First:

Is not convincing others to enter out of fear of losing money any different or somehow better than exiting a position when you’re convinced or even certain that share price is heading south?

I'm not sure what you're referring to - 'convincing others to enter out of fear' of ANYTHING is silly imo. Why would I make an effort to convince others to enter ANY TRADE? I don't, and haven't, and that was my orig point that you appeared to take exception with.

Imo that's a BAD TRAIT - to attempt to convince others to enter a position. How does that help YOU execute YOUR trades, unless you intentionally pump & dump?

Then this:

Those shares are being passed to someone...maybe even for a large profit to you and a near term significant loss to the buyer.

If I'm convinced shares are heading south, and I'm engaged in a discussion about that stock, I post my exits. I've done that on multiple boards. Again, it appears you're suggesting either I use, or maybe should use, 'subterfuge' and misdirection.

I've possibly misunderstood your points, so please correct me.

[Mithras]

Yes, I think it’s probably a perfect example of virtue signaling but I could care less and that’s not a point I’m interested in discussing. My intention is not be critical of you or anyone else.

“Why does anyone pump? What’s the purpose?” For the same purpose and reason that people virtue signal - to imply inherent value. Does it matter? Is not convincing others to enter out of fear of losing money any different or somehow better than exiting a position when you’re convinced or even certain that share price is heading south? Those shares are being passed to someone...maybe even for a large profit to you and a near term significant loss to the buyer.

My many questions were addressing trading psychology.

"Because it is unquantifiable and generally misunderstood by most traders and investors, psychology is the often overlooked intangible aspect of trading. Unlike the precise mathematical formulas used in technical analysis, we cannot easily reduce human behavior to a mathematical equation that can be plotted on a graph as a trend line or as a series of variables that we can examine in detail throughout history."

At a certain ‘level’ and within certain instruments (OTC), isn’t psychology a very effective indicator, and the biggest driver of ‘technical set ups’? If not what is...in your experience?

[price_and_volume]

So many questions in one post

I'm happy to discuss each and any of those, but not in one reply.

Pick one, and let's talk about it.

Do you feel I'm 'virue signalling' that my trading-character is above that of others?

If so you may be right, and I'll keep it very simple in this post:

If I'm in a position, I don't try to convince others to enter for any reason, because I know I may be wrong, and anything can happen, and I'd feel terrible if somebody lost money following me into a trade.

So I don't pump or promote anything I'm long.

Why would I? Why does ANYONE? What's the purpose?

[Mithras]

This is one of my favorite subjects. Thank you for linking this board in a far away post - what an appropriate use of subject matter.

I don’t think OTC boards ‘seem to be’ about pumping. I think it’s the intrinsic nature of any board dedicated to an OTC traded company.

What about the psychology of virtue?

Does/should worthiness have a place in trading? Why? Is a worthy trader still considered worthy for capitalizing on a demand for shares created by a pump in a scammy stock? Is placing a well timed buy order considered participation in that pump? What about selling on the way down...especially at the point when resistance hits and support breaks...is that considered dumping on late comers? If you have or intend to capitalize on a pump, when should the pump be ‘called out’? Why do you call it out? What’s the purpose of calling it out?

Can we all make money...? Who is ‘we’? Doesn’t somebody always have to ‘lock up and turn off the lights’?

[price_and_volume]

Here's a 10-bagger I skipped

Woulda coulda should, and I often do.

'Flagged' volume day refers to the RELATIVE MONSTER-VOLUME DAY, that serves to get my attention, then I watch and wait for a PRICE BREAKOUT for entry.

2 things of note w/ EVUS:

1. No noticable front-loading, which is kinda unusual
2. OTCmarkets.com shows 'Stop sign', and no filings since 2015

Both made me cautious and I passed on the trade; I figured it would likely be a 1-day wonder based on 'EV' stocks running hot...

Oh well - just shows that dead shells & scams can run hard quickly, while everyone argues over DD on supposedly legit companies that go nowhere, or drip lower.

Lesson? - No Fear, take the trades when presented.

[price_and_volume]

Buying 52-wk BREAKOUTS or BREAKDOWNS?

Kinda a no-brainer, but if you're stubborn: Multiple white-papers have shown MOMO tends to exist in stocks. Buying 'breakouts' (with some caveats) GREATLY OUTPERFORMS buying 'breakdowns.'

Here's a basic scan looking for new 52-wk highs, on US Companies trading less than a buck, w/ some volume. THESE ARE NOT RECOMMENDED BUYS without further research, just examples: (disclosure - I still hold positions in 2 of these from previous price & volume breakout):



Alternatively, here's a stock that has been printing NEW 52-wk LOWS for a month - It continues to be pumped and chased-lower on the board. WHY?

[price_and_volume]

Saw an interesting post today, on another site...

Summary: How Successful Traders Progress (NOT REFERRING TO "investors" who are long-term blue-chip dividend-collectors):

TRADERS:

1. Newbie: gets lucky & makes some $$, decides to become a 'trader'

2. Knowledgable: learning about 'DD', reads filings, believes in company-management, falls for 'the story', generally focuses on the WRONG STUFF, gets scammed unfortunately, and repeatedly loses $$.

3. Professional: lets the chart do the talking, knows the money is made "in the middle", waits patiently for setups and executes the trade when presented. Often wrong, but uses disciplined exits in both directions to monetize the trade, protect profits, and minimize losses regardless.

I can't argue w/ too much of that.

Be professional: Wait for setups. Take them when presented. Make money. Don't let the bastards take it away from you.

And most importantly: Don't believe msg-board 'DD' and company promises and social-media ticker-promo.

Don't be the "knowledgable" fool in #2 above. Don't be the bagholder.

[price_and_volume]

Some simple ideas:

1. Know & understand what you're trading:

2. Futures? I love futures for leverage, tax purposes, and intrinsic value. Leverage via very small percentage margins, advantageously taxed at 60/40 (google if you don't know this), and generally-known 'production costs' that allow you to 'defend' a position (crude oil, corn & coffee are unlikely to go to 'zero' or reverse-split...

3. Options? I love options for many of the same reasons above. Don't be fooled by the "90% of options expire worthless" - Only an idiot allows any position to deteriorate that far. Stop-losses on options may be pretty wide depending on your style, but don't ride ANYTHING all the way down, that's silly.

4. Sub-penny OTC stocks can be really good too. But NEVER EVER believe the bullshit HYPE and PUMP you read on the boards. If you're LONG an OTC stock it is often better to NOT EVEN READ THAT BOARD - it will be full of idiots telling you it's going to the moon. Get onboard a breakout move early (ARE YOUR RUNNING SCANS? YOU MUST), and scale-out exit as it moves your way.

5. Crypto? I got lucky w/ ETH, XMR, XRP but I tend to not 'trade' crypto much now. I'm a believer and have a GBTC position that I 'trade around' in order to build good-sized position. I'm LONG-ONLY w/ crypto.

[price_and_volume]

I trade for my living. No followers wanted.

My only income for over 10 years has been from trading. I was fortunate to be mentored by others, guys who knew HOW TO TRADE MECHANICALLY.

These guys didn't EVER try to convince others to join them in a trade.

These guys didn't EVER brag about how much they made in a trade.

These guys didn't EVER 'pump' or spread LIES about the upside.

They just took their signals, and had a disciplined exit strategy.

It's been said you can enter anywhere, and make money if you know how to execute a smart exit strategy. I tend to agree with this.

[price_and_volume]

Let's talk "trading", not PUMP scammy stocks

The OTC boards seem to be all about PUMPING, or in my case, calling-out a PUMP for what it is.

I have ZERO ISSUES with anyone trading scams and garbage OTC stocks. We can all make money in them, buying breakouts and other tradable moves.

But for a trader worthy of the description, there should be NO REASON to pump, only to dump on those who come later.

[price_and_volume]

Time to revive this board? I think so.

[JefftDecker]

AMMD

[JefftDecker]

AMSC

cupnhandle

[JefftDecker]

UGP

watching

[JefftDecker]

AOBC ready to go

[JefftDecker]

deleting soooooooooo many stocks

off the platform, most turning into sell signals.

start working on hedging possibilities or shorts.

good luck to all

[JefftDecker]

Trend balance is negative

buy puts way out in Sept 21
watch the trendlines for entry