Wednesday, July 28, 2010

Mental Fitness

Thinking out side the box

Original creative ideas are innovative because no one has ever thought about them before. Those who develop such ideas are usually thinking in a different way than others. Academic studies have shown that fundamental datapoints (earnings,corporate actions, etc.) explain roughly 30 percent of daily/weekly stock price variation. Given that fundamentals are only one of many factors that determine stock price, it is crucial to understand what other factors play a role in determining stock prices.

In order to make money in the markets, a trader needs to know something that other people don't know yet. She needs to be thinking ahead of the curve, to anticipate what is going to happen before there is evidence in the markets that it is going to happen and everyone starts to get on board with the same trading hypothesis. To do that, the trader needs to know nmore about her subject, than others. Whatever her edge is: Technical patterns, fundamental analysis, news flow - the more she knows, the more she can make a calculation about the likely target or trajectory the stock is going to follow. The more work she does, the more she is ahead of others and the earlier she gets into her position. this leads to more confidence in the position and a greater chance of success.


(Adapted from : The Mental Strategies of Top Traders, by Author : Ari Kiev )

2 comments:

sam advisors said...

sir,
by the above review do u mean that a trader should try to anticipate future or
let the better or advance trading system which one has created as per her approach do the needful. i.e. generate buy sell signal.
please elaborate thanking u!!

gourv said...

Hello Sir,
Gourav here.
Can u please have few words on trading Forex.

Regards
Gourav