psychology of trading

[stanlawj]

Story time from Jeremy (Rapercapital.com):

In March 2020 - peak COVID - I had a 70% drawdown (on my entire net worth mind you). Was visiting family in Tokyo, sleeping on the in-laws couch and tearing my hair out nightly, thinking I'd have to drive a truck for the next 20 yrs.

Went to have lunch w/ a friend - a senior banker at a bulge-bracket firm on the trading desk. He had a duffel full of Yen - maybe $1mm in cash - and a couple of gold bars as well.

Me: 'what the hell are you carrying that around for?'
Him: 'Its my nest egg. I'm moving it from Shinsei (shitty Japanese bank) to SMBC (bullet proof Japanese bank) this afternoon. Didn't you hear Ackman, hell is coming. All my clients are dumping everything. You need to GET OUT OF RISK, this is it!'
Me: 'You may well be right and this is the end times. But if I sell now - with my entire book being priced for bankruptcy, and somehow the world keeps spinning, then I'll never, ever forgive myself'.

That was March 23, 2020. I ended up 10x-ing off the bottom, up >100% by the end of that year and kept myself in the game.

 

[stanlawj]

Story of big loss by Jlaw (HK): https://www.jlawstock.com/blog/20250905

 

[LWZ]

Story of big loss by Jlaw (HK): https://www.jlawstock.com/blog/20250905

he should visit Brazil and take a selfie for his socmed, would be true closure

 

[stanlawj]

Putting this down on record: Hedge funds are more stupid than you think.
They simply chase momentum (buy what goes up, sell what goes down).
We are entering the golden age of trading for small smart traders. Technology is empowering small traders to outperform hedge funds.

Research paper:
https://www.princeton.edu/~markus/research/papers/hedgefunds_bubble.pdf

There is no evidence that hedge funds as a whole exerted a correcting force on prices during the technology bubble.


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[stanlawj]

"You won’t become profitable until you build those scars and emotional pain of losing for so long."

IMO, for most guys, trading journey requires experiencing big losses in order to limit greed.
Without those big losses, greed for money simply becomes uncontrolled. Greed for money is why big losses occur because it leads to biased decisions and/or poor judgements. (refer to the previous story by JLaw)

 

[stanlawj]

How to be a macro trader.



AMA on reddit by macro trader in a hedge fund in Singapore.

 

[Solidus_GZ]

i play penny stock in USD, got small burn - about 8K, now i switch to blue chips for Div only.
many times i sold too early, with Reits for 1-5% yield -not include Div, wah.. suddenly they went up like 10%.
anyway looking forward for more blue chip dip, strangely they mention there will be all red in Sept-Oct but i dont see it coming yet

 

[peterchan75]

Each person is program differently. In other words, we grow up experience things differently. So, this is the reason why taking strategies from others seldom works. It's not saying not to learn from others. One should take each method as a lego block and build one's strategy. Go watch the view by Jack Schwager - Winning Methods of the Market Wizards. A good entry will take care profits and a good exit saves the day. Using 80/20 rule, one should spend 80% of the time on entry and 20% on exit. Never make the market pays for things e.g. salary. Read chapter 12 of The Reminiscences of A Stock Operation on traders trying to make the market pay for a fur coat. A free copy of this book can be obtained from Archive.org. As you gain experience, you will agree this book makes sense.

My 2 cents worth.

 

[stanlawj]

QQQ automated trader (using TQQQ and SQQQ)
+40% CAGR with max 30% drawdown.

 

[stanlawj]

More money is made through selling courses than by actually trading the market.

 

[stanlawj]

Spoiler alert: he realised he made more money holding stocks over many days (i.e. swing trading) instead of "day-trading".



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