Cornholio's Reading Suggestions

Two links for today. Both come from a website that is directed at trading stocks, but replace 'stocks' with 'currencies' in the articles and you won't know the difference. Price is price whatever you trade.

6 Stages Of A Trader

Timeless Trading Wisdom – How To Correct Common Trading Mistakes

Also, I'm putting the vouch limitation on hold for now (I won't hesitate to bring it back in case I deem it necessary). Let's see if we can keep the thread clean without the vouch rule (be polite, stay on topic).

Software Special
Obviously this has nothing to do with 'reading', but I promise to make a software special some posts back so here it is.

Pivot Indicator by habeeb
Pivot Indicator version 5 by habeeb
Magnified Market Price indicatorby habeeb

MT4 color codes by hanover
Candle Aggregation indicator by hanover
Recent Candles indicator by hanover
Recent SR indicator by hanover
Plot News indicator by hanover (CPU intensive, might crash your MT4)
Time Zones indicator by hanover

% - movement indicator by thatwasme

MTF moving average
SweetSpots indicator - draws horizontal lines at round numbers
pin bar indicator
Period converter by pips4life
Other indicators by pips4life
Clock
Countdown
Grid indicator (replaces the ever-changing MT4 grid with a static grid)
VHands Trading Simulator
Time Lines - automatically draws a vertical line at every XX hour of your choosing (good for marking market open times or such)

News articles from the Kirk Report.
Note that previous links in this thread to the Kirk Report are now unavailable because the website was updated and all previous posts were (no doubt intentionally) lost. You can still access them via Google's cache if you know how to do that.

Lessons & Rules

Trading Wisdom of William Eckhardt

Six Rules

Key points from the most useful book I have ever read (Brain Rules by John Medina). I encourage everybody to do whatever to get one's hands on that book, it's that good. Borrow, buy or steal, I don't care (although stealing is not nice, this book is worth it).

Here are the key points from the 12 points presented in the book (I pulled them from the book's website).

Rule #1: Exercise boosts brain power.
The human brain evolved under conditions of almost constant motion. From this, one might predict that the optimal environment for processing information would include motion. That is exactly what one finds. Indeed, the best business meeting would have everyone walking at about 1.8 miles per hour.
Researchers studied two elderly populations that had led different lifestyles, one sedentary and one active. Cognitive scores were profoundly influenced. Exercise positively affected executive function, spatial tasks, reaction times and quantitative skills.
So researchers asked: If the sedentary populations become active, will their cognitive scores go up? Yes, it turns out, if the exercise is aerobic. In four months, executive functions vastly improve; longer, and memory scores improve as well.
Exercise improves cognition for two reasons:

 

1. Exercise increases oxygen flow into the brain, which reduces brain-bound free radicals. One of the most interesting findings of the past few decades is that an increase in oxygen is always accompanied by an uptick in mental sharpness.
2. Exercise acts directly on the molecular machinery of the brain itself. It increases neurons’ creation, survival, and resistance to damage and stress.

Rule #7: Sleep well, think well.

 

1. When we’re asleep, the brain is not resting at all. It is almost unbelievably active! It’s possible that the reason we need to sleep is so that we can learn.
2. Sleep must be important because we spend 1/3 of our lives doing it! Loss of sleep hurts attention, executive function, working memory, mood, quantitative skills, logical reasoning, and even motor dexterity.
3. We still don’t know how much we need! It changes with age, gender, pregnancy, puberty, and so much more.
4. Napping is normal. Ever feel tired in the afternoon? That’s because your brain really wants to take a nap. There's a battle raging in your head between two armies. Each army is made of legions of brain cells and biochemicals –- one desperately trying to keep you awake, the other desperately trying to force you to sleep. Around 3 p.m., 12 hours after the midpoint of your sleep, all your brain wants to do is nap.
5. Taking a nap might make you more productive. In one study, a 26-minute nap improved NASA pilots’ performance by 34 percent.
6. Don’t schedule important meetings at 3 p.m. It just doesn’t make sense.

Rule #8: Stressed brains don't learn the same way.

 

1. Your brain is built to deal with stress that lasts about 30 seconds. The brain is not designed for long term stress when you feel like you have no control. The saber-toothed tiger ate you or you ran away but it was all over in less than a minute. If you have a bad boss, the saber-toothed tiger can be at your door for years, and you begin to deregulate. If you are in a bad marriage, the saber-toothed tiger can be in your bed for years, and the same thing occurs. You can actually watch the brain shrink.
2. Stress damages virtually every kind of cognition that exists. It damages memory and executive function. It can hurt your motor skills. When you are stressed out over a long period of time it disrupts your immune response. You get sicker more often. It disrupts your ability to sleep. You get depressed.
3. The emotional stability of the home is the single greatest predictor of academic success. If you want your kid to get into Harvard, go home and love your spouse.
4. You have one brain. The same brain you have at home is the same brain you have at work or school. The stress you are experiencing at home will affect your performance at work, and vice versa.

Definitely worth a read: Speed learning cheat sheet
Speed reading and audio books - definitely by cup of tea.

Two good reads from FF that I have discovered as of late:

Stop F*****g Around - Just Do It
Read it and take action. Print it out for future reference (we all get lazy from time to time and it's good to have that post printed out for that occasion).

CrucialPoint (excerpt from my trading journal over the years)
CrucialPoint has put together a journal detailing his success to making money but I think there's much more than that hidden under the hood. If you've got enough experience as a trader then you'll chew through his somewhat cryptic posts. By somewhat cryptic I mean that it's much like a book that's suitable for children and adults - the only difference being that both groups walk away with a different understanding of what the book was about.

Compound Interest Calculation Manual: http://www.forexfactory.com/showthread.php?t=241044

BUNGHOLE!!!

Hey Bug,

First of all, the readings are quite interesting and mind opening.

I am having trouble getting to those links below:


Know your limit when drinking tequila by habeeb
and
Stop F*****g Around - Just Do It

Are they still valid or is it just that I am still a junior member that I cant read it?

My regards,
Isladezile

They're in the members' lounge which is open to FF members only. It seems that junior members are denied access too so you're just going to have to reach 10 posts or something.

In December I started gathering and processing information that could help me tackle the psychological part of trading - it was the only major thing holding me back. I had looked into psychology before, but I didn't go as deep as I did in December. Some of you here already know that I have a keen interest in everything and everyone that connects the psychological, the molecular, the cellular and the neurological together into one framework. Yes, I'm the kind of person who wants to know how a phone or a microwave oven works, how a plane's wings generate lift etc. However, the most fascinating topic for me is still the human body, in particular the brain. :nerd:

Long story short, I found some interesting resources that I would very much like to share with you. The way I follow these is that I have an RSS feed so I don't have to revisit them every other day, the updates get delivered to me automatically.

WEBSITES
THE BRAIN FROM TOP TO BOTTOM
The easiest way to navigate this website is via sitemap and I am posting the links here. The website is also available in French, see the bottom left corner for a link (it's a Canadian site).
Beginner level
Intermediate level
Advanced level

British Psychological Society's blog
As the header says, they are blogging on the brain and behaviour. They don't specifically blog on trading psychology, but every other week they post something that just as well could be published on a trading psy blog.
BPS Research Digest

Psychology Today
Again, they don't concentrate on trading psychology, but topics like procrastination, fear, anger, rationalisation etc. are brought up often. The articles that they publish include new research findings but also how-to articles on based on previous research. Like the above website, this one too is managed and written by professionals with degrees in psychology.
Psychology Today
Use this link to browse topics
Index of blogs hosted at PT

BOOKS
Brain Rules by John Medina
This is an absolutely must read book even if you are not trading. I have written about it before (here) but it deserves another bump. Rent it, steal it or buy it, but you have to read it.

Trading in the Zone and The Disciplined Trader by Mark Douglas
Both books have done much to change the way I view the market and my relation to it. I've learned a lot of new things, but I've also had to 'forget' a lot of old beliefs that were harmful. It's all in the book.

12 Steps To Get Things Done

This is a blog post from The Kirk Report (yes, he is a trader). I don't want to copy and paste the whole text so here are the most important things. You can continue reading here.

Step 1. Don’t talk big. Big-talkers are notorious under do-ers, under-achievers and under-performers. They’re also pains in the arse.

Step 2. Don’t wait for things to work out. Idiots wait for things to work out. Rather than hoping things will happen, make them happen.

Step 3. Lose the bad attitude. Attitude is a choice. Better attitude equals better decisions, behaviors and outcomes.

Step 4. Don’t eat crap. Being unhealthy on a physical level means you won’t function optimally on any level: mentally, emotionally, professionally or socially. Eat crap and you’ll look, feel and function like crap!

Step 5. Actually care about others. Being a self-centered idiot ain’t a recipe for success.

Step 6. Don’t make life harder than it needs to be. Life’s challenging enough without you complicating the simple. Suck it up, Princess.

Step 7. Do things early in the day. Being productive early puts you in a better place (mentally, emotionally and creatively) for the rest of the day.

Step 8. Let go of your ill-conceived beliefs. It’s time to lose those self-limiting, disempowering beliefs. They’ve run your life for long enough. You’re good enough, talented enough and, yes, you deserve happiness.

Step 9. Bad things happen and life’s not fair – deal with it. More often than not success or failure will be determined by the way you react to the situations, circumstances and events (good and bad, foreseen or not) of your world. Better reactions equal better results.

Step 10. Don’t focus on (or obsess about) things you can’t change. Wasting your time, talent and emotional energy on things that are beyond your control is a recipe for frustration, misery and stagnation. Invest your energy in the things you can control.

Step 11. Don’t avoid things you fear. Putting your head in the sand just shows the world your arse. And none of us want that. Lasting change begins with awareness and acknowledgment. Step up and do what’s necessary.

Step 12. Don’t over-think things. Analysis paralysis is a painful, pointless and unnecessary condition. To think is good. To obsess is bad. Stop obsessing.

Good list, Bug!

Thanks!

I know quite a few people on FF already follow forexlive but I just wanted to make this special post to point out the information that doesn't age. Most of this information was new for me and I haven't seen the kind of excellent information anywhere else on the web. If you're a retail trader like me, with no career experience in fx then this is a must read. It's very likely you won't get information like this elsewhere. All of these questions were given answers during the Q&A sessions which they host from time to time.

If you're confused by the jargon, see the forex jargon section on their site.

Q: When you talk about barriers, are you referring to knock-ins or knock-outs?
Q. Is the forex market too big to be manipulated?
Q. What qualifications are necessary to be a forex trader?
Q. How certain are you that it is central Bank buying when you report it? And what are their motivations profit, reserves both?

Q. How often do you think bank trading recommendations bogus?
Q. What about those 1.3700 strikes on Monday?
Q. What are bids and offers
Q. Do you often get exact sizes of deals heard in the market

Q. What is short-covering?
Q. Are Fundamentals better or technicals?
Q. What is a fixing?
Q. What is the role of the BIS?

Q. Wait, I have another fixing question!
Q. What’s the difference between volume and liquidity
Q: Why do the big banks choose to show their intentions with strong offers/bids?
Q: Regarding market positioning

Q: Top three news providers?
Q. How much attention should we pay to revisions
Q. How will the markets react to the end of QE?
Q: Why do dealers gun for stops?

Q. Barrier options: What purpose do they serve, and why do people use them?
Q> What are month-end flows
Q. Why does JPY rise when bad things happen in Japan?

I am not affiliated to forexlive, their sponsor or any of their employees in any way. I'm just a regular reader of their site.

New Q&A from forexlive:
Hardest thing in the world is managing a profit
A quick primer on fixings

A post worth mentioning that didn't appear in the Q&A category:
The difference between trading at a bank and what most of you are doing

On month-end/quarter-end money flows
Liquidity thinner than normal at month, quarter-end
End-of-month fixes usually means significant flows

And to top it off, something funny
Remember the time I gave Greenspan a heart-attack?

Danske Research: Greek debt restructuring difficult to avoid (pdf)
FT Alphaville: UBS on the commods crash – and getting ready for the next one

WSJ's The Source blog: Beating the Investment Bubble
Snippet from the WSJ story:
“When the market keeps going up, people are naturally led to make larger and larger investments in the boom. Their greedy brain is convinced that it has solved the stock market—it has found the pattern that matters—and so they forget to think about the possibility of a loss.”

On negative real interest rates, speculation and inflation. Posted below are outtakes with links to original articles in their entirety.

WSJ's The Source blog - Waiting for the End of Negative Real Yields
With much of the developed world registering deeply negative real interest rates, investors have started to embed them in their long-run expectations for asset classes across the board. This is bound to end in tears. U.S. one-year real interest rates work out to be a negative 3%. In the U.K., it’s a little under negative 4%. In Germany, it’s a little more than negative 1%. With rates like these, little wonder that investors in these countries are piling into overpriced assets. Like commodities, which generate zero yields but at least hold the promise of capital preservation. Or equities, which are producing historically low long-run projected returns—currently 3.5% for the S&P 500, or less than half of what investors demanded, on average, before the bubble years that began in the early 1990s, according to John Hussman of Hussman Funds. Or corporate debt, where spreads are back down to the historic lows that predominated in the run-up to the 2008 financial meltdown.
(LINK to entire article)

Andy Xie - In A Tight Spot
And this negative real interest rate is turning good savers or conservative investors into speculators. The threat to the value of cash means that those who refused to speculate before have little choice but to do so now, to try to maintain their wealth. But this frantic search can bring about bubbles and the quest for quick gains incites human greed. Negative real interest rates are generating excessive liquidity.

But what these people have to remember is that those who live by the sword die by it. The central banks and governments that play with money and human weaknesses will suffer. Speculation has quickened the pace at which money creation turns into inflation. The world is entering a period of turmoil, largely due to inflation, and at its end we will witness major governments falling to popular rebellions.

(LINK to article)
About Andy Xie (LINK)

The Kirk Report: How To Maintain An Optimal State
Linda Bradford Raschke : The Mental Aspect of Trading

Over the last year I've read some interesting stuff about how the human mind works and I've bookmarked some of the more interesting articles. Here's a few exploring the 'dark side' - meaning how we sometimes end up doing more harm while planning for success.

The Dark Side of Goal-Setting
Does fantasizing give you the motivation to achieve your goals?
How Rewards Can Backfire and Reduce Motivation
Why goal setting doesn't work

From Jeremy Dean, the author of Making Habits, Breaking Habits, a book which I introduced in the book thread:
Habits and The Unexpected Benefits of Weak Self-Control
How Long to Form a Habit?
Success! Why Expectations Beat Fantasies
11 Goal Hacks: How to Achieve Anything