Archive | November, 2015

Delusions Every Trader Faces

Usually when we think of delusions we imagine mental disorders: someone struggling with schizophrenia or hypochondria. We may even imagine somebody we know–somebody who is high-strung with anxiety and convinced the world is out to get them. There are some pretty bizarre delusions out there:

  • Ever feel like you’re life is a movie? For people suffering from the Truman Show Delusion, they’re literally convinced that their life is a reality show they can’t escape from. This article on Buzzfeed reports that a man actually sued HBO for putting him on a secret reality show.
  • As if living your life in a reality tv show wasn’t bad enough, imagine your life was a video game! Want to score points to win? Steal cars, avoid police, and receive your instructions through your gaming headphones. Even if you’re arrested, it’s just another level to the game. (Source)
  • Do you know someone who lives their life in denial–to the point that they don’t even think they exist? A rare condition known as ‘Walking Corpse Syndrome’ is a delusion where the individual is convinced that they’re already dead or don’t exist. Some even claim to be able to smell their own rotting flesh.

I think most of us suffer from multiple delusions (hopefully not that serious, though). A delusion is a belief or impression that is firmly maintained despite being contradicted by what is generally accepted as reality or rational. I’d like to think that I’m connected with reality and don’t belong in an asylum (my family might tell you differently, especially when I’m even remotely lacking sleep), but as I’ve grown older I’ve been able to look back and recognize the delusions I used to live by. Most traders experience delusions as well.

Traders, both new and old, often experience delusions in the currency market. Some common ones we might face:

  • “If I just keep trading, I can make a little more money.” That’s a scary delusion. You can be following the charts all day making trades, but it’s not about how many it’s about how well. The quality of your trades is much more important than the quantity.
  • “I can make some quick, easy cash in Forex.” The economy is not a magic box where you put a little money in and get a lot of money out. Trading requires discipline and strategy–not luck.
  • “It’s going to come back soon…”  This delusion can bring you down. Fast. When you hit your stop loss, it’s time to get out. Trying to hang on to a losing trade is like trying to hang onto a hangnail–it’s a lot less painful to just cut it off.

We’re all at least a little guilty of these delusions, but a diagnostic is the first step to a cure. Review some of your past trades, and identify any delusions that affected the outcome. Then, find a way to overcome them; you can share it with a friend or mentor, keep a reminder next to your computer, or even watch a cheesy motivational trading video. Whatever you need to do, don’t let yourself be the reason you don’t succeed.
Happy Trading!

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Why The Little Guys Can Still Win In The Currency Market

Bigger is better, right? Well, traditionally, yes. However, sometimes a new way or an original idea is just downright better than conventional methods. Take, for example, a fight between the big guy and the little guy. What advantages does each one have, and who will win?

Big Guy Little Guy
Muscle Mass Not muscle bound
Powerful hits Fast, successive strikes
More damage per connection Better angle for body striking
Better long range Better short range

 

Take a look at this epic fight from Sherlock Holmes 2:

Even though he’s up against a larger opponent, Sherlock effectively uses his speed and strategy to make quick work of that guy! I wouldn’t want to be on the wrong side of team Sherlock. Ever.

Now parallel this to The Apiary Fund. We’re definitely a smaller company made up of the little guys. Most of our traders don’t have years of schooling and finance degrees under our belts; however, we aren’t hung up in corporations, worried about whether or not the new kid in the next cubicle is out trading us, or whether or not we’ll still have our jobs at the end of the month. We don’t have to move massive amount of money bulk: our smaller individual portfolio’s can quickly jump into the perfect set up for a quick jab at the market. You’re free from corporate stress while still enjoying the benefits of having a company back you up! You guys bring us the ‘Little Guy’ advantages, and together we create the ‘Big Guy’ perks (for example, everyone coming together and shorting the euro at the Manhattan Beach Summit).

Also, please note Sherlock’s line, “This mustn’t register on an emotional level,” and then how he mapped out his strategy and followed throuh. Remind you of something you’ve been told a hundred times?? 😉

Happy Trading!

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Apiary Manhattan Beach Summit

On October 26th, 9:00 pm West Pacific Time, a crowd gathered on the Manhattan Beach pier.

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A passerby stopped to see what the excitement was about, and imagine their surprise when they found Nate, Todd, and myself sitting comfortable on our UCLA camp chairs and using a Verizon hotspot to trade the Asian session, which was making its own waves—3 ticks up 2 ticks down.

 

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It’s not that we expected to make much money during the doldrums of the Asian session, but we wanted the experience of trading on the beach!  And we had a blast!  We were 30 bees on a beach–with a whole lot of curious bystanders!  It wasn’t the fastest trading of the day, but it was profitable with some 54 pips of combined profit by sessions end.

That was just one highlight from the Manhattan Beach summit, some others were:

On Monday morning, Melinda predicted the close of the Wednesday 10:59am candle would be 1.1064  – The actual close:  1.1065.  She came within 1 pip of calling the actual close!  Impressive analysis, Melinda!

We split the summit attendees into 6 teams, and each team created their own trading strategy–presenting the strategy to a shark tank of Nate, Todd and Shawn. Our jobs were to choose a strategy, and trade it in a competition on Wednesday morning. The winning system: Bollinger bands made 2 winning trades for a total of 11 pips!

4 of the 6 trading of the participants’ strategies were profitable!

Todd pulled out 233 pips of profit in the Tuesday morning trading session.  He was kind of quiet most of the morning…  When confronted, he admitted he was trading.  We told him there was a program for that!

In the spirit of crowd intelligence, we set up an experiment and polled the room to see how the USD would respond to Wednesday’s Fed Announcement.  37 of the participants said the USD would strengthen, while only 12 said it would weaken. We shorted the EURO, and made some quick money on Wednesday!

But the best part was watching our outstanding Apiary traders develop confidence in their own trading strategies! We’d like to send a HUGE shout out to all the traders who attended the LA Summit; we learn just as much from spending time with you, and it was a real privilege to trade with everyone who attended.

Thanks again, and Happy Trading!

-Shawn

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