AI
SELLING: The Psychology of Human Behavior, Philosophy and Personal Growth
I had a friend in high school. He tutored me for free to get me ready for a Trig Exam. I asked him why he did it? He said it helped him to formulate the material in his mind as final preparation for the test. It showed him the areas where he was weak. So, that night all he had to do was go home and brush up on what he needed to learn for the exam. He also said by doing this he didn’t have to study as much because he only had to go over the material he didn’t know. As it turned out I wasn’t the only one he helped. He tutored mostly girls, which is why he always had a date. He is now a medical doctor.
Understanding human behavior has helped me to make better decisions and understand how this game is played. Some people have better intuition than others. The better one gets at interpreting one's own intuitive skills, the easier it becomes to identify potential money making opportunities.
The quicker we learn these lessons the better trader we will become. Unfortunately, it seems one can only learn from personal experience? If you know of another way, please let me know.
Bottom Line: The faster we learn psychology and human behavior the better stock trader we become.
Fear is the culprit. One has to overcome the fear of losing money. I have missed many trades because I sold too soon. Here's an example of two:
Silverado Gold-SLGLF:
Clive Maund sums it up nicely in his article, Now Try Telling Me That Charts Don’t Work:
http://news.goldseek.com/CliveMaund/1140471870.php
This one I Sold Way Too Early, in the First Wave at a dime. It had 2 more waves. The above article is written just about this type of trade.
Nanobac Pharmaceuticals-NNBP:
Here’s a similar example where I sold in the first wave at around a dime. Why, because I was tired of waiting and wanted to buy another stock. It was a big mistake. In this particular case it had 2 additional waves. Look at the volume in the second wave. The volume is really important to watch.
I now refer to these trades as, First Wave Selling.
So, what’s the lesson in these 2 examples?
Get over the fear of losing money?
Don’t get impatient?
In both examples I owned both stocks for over a year. I thought they were duds. I sold them out of frustration (to be rid of them) and invested the money in another company. In both cases, if I’d been more patient, their pay off would have been three to five times greater!
DECIDING WHEN NOT TO SELL:
(This one I Kept to Sell later. It ran up just after I bought it. Did I make the right decision?)
Altus Explorations Inc-ATUX
Here’s an example of one that I thought had a lot more momentum left in her. I passed on selling her, determined to get a better return. Did I make a mistake? That’s the funny thing in this business. Hindsight is always 20/20. In this case not enough water has traveled under the bridge to know if I made the right decision. What would you have done, would you have sold at 0.12?
Bottom line is the charts do what the charts do. Sometimes, we get lucky and sometimes we don’t. But, it does help to learn the human behavior issues. In both cases the MM’ers or the company’s shake out the week hands intentionally before releasing the Bull’s to Run. That’s what’s difficult to read. We must develop our intuition and skills of reading charts. The charts never lie.
Reminder:
Another good thing to remember is that back in the 1950’s Warren Buffett held his stock positions for nine years before he sold.
Ted Warren believed in charts. I post these notes again for easy access for both you and for me.
Advanced Commodity Trading Techniques:
THE MANUAL (Out of Print)
By Ted Warren
Warren’s Trading Techniques came from his writings and experiences documented during the 1930’s through 1950’s. I like his techniques because they are simple.
Every trader is responsible for his own decisions. If you trade from these notes you accept full responsibility for your actions whether you win or lose.
Notes:
• Sought markets that were just ending a lengthy accumulation base. Got in when the chart gave him the right signal.
• Warren’s not interested in short term trading, too risky. Don’t have the temperament.
• Worst enemy is emotions. Fear of missing a move was primarily the worst weakness, causing one to get into the market too often.
• Soon became apparent, the importance of manipulation in the market and the psychology of the public which is the basis for interpreting future actions of the market.
• The public will sell at any price when they are scared or when they are pressed by margin calls or for many normal reasons when they are in dire need of cash.
• Charts: Pay attention to head and shoulder bottoms.
• It’s from lengthy low areas that many of the profitable large moves start.
• Only buy high after a proper formation such as a triangle, especially a flat-topped triangle or a long consolidation period of many weeks.
• If your lucky enough to have a bottom or a good formation show up once a year, play it heavily by buying on a scale-up during the early part of the move.
• Playing the small and intermediate moves is what kills you.
• “It is difficult to describe tops in the futures markets. They are almost always made up of violent action. That is the time to sell. But, the very largest moves will have violent trading actions with its shakeouts before the top is made. Sometimes there may be two tops, months apart. There are so many variations. I have sold on the top range, but rarely. Once, I sold rye on a top day purely by accident because I stubbornly held on for a long term capital gain in 1951. I realized previously that the insiders, with their huge profits must try to convert them into long-term capital gains as much as possible. Because of this reasoning I was able to hold on with confidence.”
• Because tops are usually so violent and can so seldom be picked with any degree of accuracy, I advise against trying to sell short.
• Pyramiding: After having bought about one-third of your purchasing ability within the latter part of a head and shoulders bottom during an accumulation or consolidation triangle, you should buy another one-third as it breaks out on the upside. Then after this when it has a reaction, place a stop buy for the other third above the last high. You now have a cushion of profit to help keep you from sweating. As the markup stage continues at a moderate pace with normal setbacks, after each advance into new high ground you can use your paper profits to buy more by placing stop buys above recent highs during a setback. It is very common during this early markup stage for a commodity to form a nearly perfect trend line. As momentum is gathered there may suddenly be a one-day fast rise followed by a sharp setback almost as quickly giving a weak appearance as if it has gone too high. Don’t let it fool you. It’s meant to look this way. You and others are considered to be excess baggage. This was meant to dump you overboard and to discourage buying. Normally after this shakeout with the price recovering to near the recent highs, you can buy more with your paper profits if you wish and move your stop sells to below the recent low. Remember if you have a long base behind this move you can expect a large rise. After the next fast rise, if it continues to “boil” on the upside, it may be in a top area. From here on, you are on your own. This first violent action may be the tip or it may not be. I have seen tips that appeared to be obvious but sold long before because I had misinterpreted a previous action as a tip. You may wait with patience to pick a strong appearing bottom but when you are in, you are under pressure to pick a selling spot and there comes a time when time is short.
It is important to keep and study old charts to learn to anticipate future action by studying past actions. If their wasnt excess speculation, there would only be moderate price changes.
• Hedging is selling short against commodities in trade and storage. Without speculators there could not be any hedging. Why not make use of the gullible public to absorb the risks involved by wide swings in prices!
• Strange as it seems, after all the know how one will seem to have acquired, nearly every right decision made will turn out to be at the wrong time. When a purchase was made, wasn’t everybody else buying? Obviously, it had to go up. It did but not much. All the bullish news indicated it would go much higher. What went wrong? Simply that too many traders had the same opinion.
• One can afford to plunge with a minimum of risk in the head and shoulders or triangles of long duration.
• Beware of trying for the intermediate moves.
• In the last 16 days of action, I could recognize how the manipulations in the triangle affected the average trader. I could see the internal forces that were being built up. From the trader’s viewpoint, it was obvious the rise could not continue going up. The trader does not understand that when it is obvious to him it is also obvious to the majority. Except for temporary periods, the majority is always wrong because the insiders are on the opposing side, just like a contest. They know what they are doing and have the power to do it.
• Chartist: Study the charts carefully. When I don’t have a positive appearing formation to back up my opinion, I seem to get frightened too easily.
• It’s far better to buy in at as safe a manner as possible. If I can buy into a slow rise that confirms my opinion from a sound base, I will acquire a cushion of profit against an early shakeout. There are no signs for the average fundamentalist to foresee the big move ahead except from what I can extract from the charts. Keep studying the charts.
I had a friend in high school. He tutored me for free to get me ready for a Trig Exam. I asked him why he did it? He said it helped him to formulate the material in his mind as final preparation for the test. It showed him the areas where he was weak. So, that night all he had to do was go home and brush up on what he needed to learn for the exam. He also said by doing this he didn’t have to study as much because he only had to go over the material he didn’t know. As it turned out I wasn’t the only one he helped. He tutored mostly girls, which is why he always had a date. He is now a medical doctor.
Understanding human behavior has helped me to make better decisions and understand how this game is played. Some people have better intuition than others. The better one gets at interpreting one's own intuitive skills, the easier it becomes to identify potential money making opportunities.
The quicker we learn these lessons the better trader we will become. Unfortunately, it seems one can only learn from personal experience? If you know of another way, please let me know.
Bottom Line: The faster we learn psychology and human behavior the better stock trader we become.
Fear is the culprit. One has to overcome the fear of losing money. I have missed many trades because I sold too soon. Here's an example of two:
Silverado Gold-SLGLF:
Clive Maund sums it up nicely in his article, Now Try Telling Me That Charts Don’t Work:
http://news.goldseek.com/CliveMaund/1140471870.php
This one I Sold Way Too Early, in the First Wave at a dime. It had 2 more waves. The above article is written just about this type of trade.
Nanobac Pharmaceuticals-NNBP:
Here’s a similar example where I sold in the first wave at around a dime. Why, because I was tired of waiting and wanted to buy another stock. It was a big mistake. In this particular case it had 2 additional waves. Look at the volume in the second wave. The volume is really important to watch.
I now refer to these trades as, First Wave Selling.
So, what’s the lesson in these 2 examples?
Get over the fear of losing money?
Don’t get impatient?
In both examples I owned both stocks for over a year. I thought they were duds. I sold them out of frustration (to be rid of them) and invested the money in another company. In both cases, if I’d been more patient, their pay off would have been three to five times greater!
DECIDING WHEN NOT TO SELL:
(This one I Kept to Sell later. It ran up just after I bought it. Did I make the right decision?)
Altus Explorations Inc-ATUX
Here’s an example of one that I thought had a lot more momentum left in her. I passed on selling her, determined to get a better return. Did I make a mistake? That’s the funny thing in this business. Hindsight is always 20/20. In this case not enough water has traveled under the bridge to know if I made the right decision. What would you have done, would you have sold at 0.12?
Bottom line is the charts do what the charts do. Sometimes, we get lucky and sometimes we don’t. But, it does help to learn the human behavior issues. In both cases the MM’ers or the company’s shake out the week hands intentionally before releasing the Bull’s to Run. That’s what’s difficult to read. We must develop our intuition and skills of reading charts. The charts never lie.
Reminder:
Another good thing to remember is that back in the 1950’s Warren Buffett held his stock positions for nine years before he sold.
Ted Warren believed in charts. I post these notes again for easy access for both you and for me.
Advanced Commodity Trading Techniques:
THE MANUAL (Out of Print)
By Ted Warren
Warren’s Trading Techniques came from his writings and experiences documented during the 1930’s through 1950’s. I like his techniques because they are simple.
Every trader is responsible for his own decisions. If you trade from these notes you accept full responsibility for your actions whether you win or lose.
Notes:
• Sought markets that were just ending a lengthy accumulation base. Got in when the chart gave him the right signal.
• Warren’s not interested in short term trading, too risky. Don’t have the temperament.
• Worst enemy is emotions. Fear of missing a move was primarily the worst weakness, causing one to get into the market too often.
• Soon became apparent, the importance of manipulation in the market and the psychology of the public which is the basis for interpreting future actions of the market.
• The public will sell at any price when they are scared or when they are pressed by margin calls or for many normal reasons when they are in dire need of cash.
• Charts: Pay attention to head and shoulder bottoms.
• It’s from lengthy low areas that many of the profitable large moves start.
• Only buy high after a proper formation such as a triangle, especially a flat-topped triangle or a long consolidation period of many weeks.
• If your lucky enough to have a bottom or a good formation show up once a year, play it heavily by buying on a scale-up during the early part of the move.
• Playing the small and intermediate moves is what kills you.
• “It is difficult to describe tops in the futures markets. They are almost always made up of violent action. That is the time to sell. But, the very largest moves will have violent trading actions with its shakeouts before the top is made. Sometimes there may be two tops, months apart. There are so many variations. I have sold on the top range, but rarely. Once, I sold rye on a top day purely by accident because I stubbornly held on for a long term capital gain in 1951. I realized previously that the insiders, with their huge profits must try to convert them into long-term capital gains as much as possible. Because of this reasoning I was able to hold on with confidence.”
• Because tops are usually so violent and can so seldom be picked with any degree of accuracy, I advise against trying to sell short.
• Pyramiding: After having bought about one-third of your purchasing ability within the latter part of a head and shoulders bottom during an accumulation or consolidation triangle, you should buy another one-third as it breaks out on the upside. Then after this when it has a reaction, place a stop buy for the other third above the last high. You now have a cushion of profit to help keep you from sweating. As the markup stage continues at a moderate pace with normal setbacks, after each advance into new high ground you can use your paper profits to buy more by placing stop buys above recent highs during a setback. It is very common during this early markup stage for a commodity to form a nearly perfect trend line. As momentum is gathered there may suddenly be a one-day fast rise followed by a sharp setback almost as quickly giving a weak appearance as if it has gone too high. Don’t let it fool you. It’s meant to look this way. You and others are considered to be excess baggage. This was meant to dump you overboard and to discourage buying. Normally after this shakeout with the price recovering to near the recent highs, you can buy more with your paper profits if you wish and move your stop sells to below the recent low. Remember if you have a long base behind this move you can expect a large rise. After the next fast rise, if it continues to “boil” on the upside, it may be in a top area. From here on, you are on your own. This first violent action may be the tip or it may not be. I have seen tips that appeared to be obvious but sold long before because I had misinterpreted a previous action as a tip. You may wait with patience to pick a strong appearing bottom but when you are in, you are under pressure to pick a selling spot and there comes a time when time is short.
It is important to keep and study old charts to learn to anticipate future action by studying past actions. If their wasnt excess speculation, there would only be moderate price changes.
• Hedging is selling short against commodities in trade and storage. Without speculators there could not be any hedging. Why not make use of the gullible public to absorb the risks involved by wide swings in prices!
• Strange as it seems, after all the know how one will seem to have acquired, nearly every right decision made will turn out to be at the wrong time. When a purchase was made, wasn’t everybody else buying? Obviously, it had to go up. It did but not much. All the bullish news indicated it would go much higher. What went wrong? Simply that too many traders had the same opinion.
• One can afford to plunge with a minimum of risk in the head and shoulders or triangles of long duration.
• Beware of trying for the intermediate moves.
• In the last 16 days of action, I could recognize how the manipulations in the triangle affected the average trader. I could see the internal forces that were being built up. From the trader’s viewpoint, it was obvious the rise could not continue going up. The trader does not understand that when it is obvious to him it is also obvious to the majority. Except for temporary periods, the majority is always wrong because the insiders are on the opposing side, just like a contest. They know what they are doing and have the power to do it.
• Chartist: Study the charts carefully. When I don’t have a positive appearing formation to back up my opinion, I seem to get frightened too easily.
• It’s far better to buy in at as safe a manner as possible. If I can buy into a slow rise that confirms my opinion from a sound base, I will acquire a cushion of profit against an early shakeout. There are no signs for the average fundamentalist to foresee the big move ahead except from what I can extract from the charts. Keep studying the charts.
Beware Bull's Ready to Run - Before investing $ do your own dd. All posts are my opinion.
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