While bonds have been trending aggressively over the last few months in a Bear Market (yield), equities seem to be very directionless or sitting in a deer market. A deer market is a term used to illustrate a market condition when investors are unable or unwilling to move due to uncertainty – like a deer who freezes when “caught in the headlights” of a vehicle. (more…)

Following last week’s theme of the use of sports psychology in trading, this week we will discuss the use of performance cues. In professional sports, like trading, there is a huge amount of information that must be processed at any one time. Some of this information is essential, some of it distracting. While most people will spend a lot of their time trying to ignore the distractions and concentrate on what’s important, sports psychologists have actually found this to be counterproductive. Instead of trying to block out noise such as the crowd, elite athletes will simply accept these distractions for what they are and instead focus their attention on a few key aspects of their performance. These points of focus are known as performance cues. For a tennis player it may be paying attention to the upper body of his opponent before a serve or for a skier it might be making a strong edge on their outside ski and keeping their hands forward. The key for a trader is to establish what the important performance cues are in their own trading environment. (more…)

To be a perfect trader or to trade perfectly, that is the question… and it is not an insignificant question. (more…)

Human beings are genetically hardwired to avoid that which causes them pain. It is this flight response to potentially harmful situations and stimuli that protects us from unnecessary suffering, sees us live to fight another day and has allowed our species to outperform in the battle for the survival of the fittest. It’s only natural then that this genetic predisposition should manifest itself in the trading arena. However, what is effective in life is not always effective in trading. If you step into the trading arena you have to be prepared for the rules of the game to change. (more…)

A common preoccupation, bordering on an obsession, for many novice traders is the ability to identify and profit from a technical breakout that leads to a trending market. I don’t blame them for seeking the answers to questions such as “how do I know when this market is going to break?” or “where do I enter and where should I place my stop?” It seems a logical subject for discussion to which there must be a solution; how else do you make money! Unfortunately for them this preoccupation is fuelled by the retail trading industry and the trading communities on the internet that promote freely available, fool-proof systems and free training with guaranteed results. The majority of these products are trend-following in nature and make for easy-to-draw technical charts, clear and unambiguous to all those that view them – after the event of course. How convenient it is to offer a product that once plugged-in will turn the global financial markets into an instant cash-generator for anybody with internet access. (more…)