How to Make Affirmations Work Poloron Products: Memory is Made Up

How to Make
Affirmations
Work
Why is it so? What
I Believe About
Investing.
Mindset Crimes
Poloron Products:
Memory is Made Up
Market Update
Matthew Sharratt
Warning!!! Stochastic
Indicator – Mutton
Dressed as Lamb?
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MARKET UPDATE
Matthew Sharratt
Van K. Tharp, Ph.D.
Page 5
Poloron Products : Memory is
Made Up
TRADING ARTICLES
Page 19
Graeme Pearson
Davin Clarke
How to Make Affirmations
Work
Page 9
Page 23
Louise Bedford
REGULARS
Mindset Crimes
Quotes to Inspire Page 22
Page 13
News and Events Page 29
Gary Stone
Why is it so? What I believe
about investing.
Page 15
Warning!!! Stochastic Indicator
– Mutton dressed as Lamb?
Did You Know? Page 26
Trader’s Library – Book Review
Page 27
YOUR TRADING SOLUTIONS
T +61 3 8682 8774 | F +61 3 8678 3034 |Graeme@yourtradingsolutions.com |
www.yourtradingsolutions.com
Welcome to Issue 42 of the Your Trading Solutions eMagazine.
In this issue I have written an article titled “How to Make
Affirmations Work” where I look at some pointers to making
affirmations more effective. Gary Stone talks about his investing
beliefs and what drives Share Wealth Systems in “Why is it so?
What I believe about investing”. Louise Bedford’s article “Mindset
Crimes” gives some insight into what robs traders of their wealth. In
Van K. Tharp's article "Poloron Products: Memory is Made Up" he
explores how your memory can’t be trusted and is distorted by your
perception. This month we have a new contributor inboard. I would
like to welcome Davin Clarke from Trade Direct 365. In his article
“Warning!!! Stochastic Indicator – Mutton dressed as Lamb?” Davin
looks at the Stochastic Indicator and some of its pitfalls.
We have our regular Market Update with Matthew Sharratt from
SCM Equities. Matt is offering all YTS eMagazine readers a full
review of your portfolio and he will put a comprehensive
investment plan together for you free of charge.
We hope you enjoy the current issue of the Your Trading Solutions
eMagazine. If you have any comments or feedback, please direct
them to: support@yourtradingsolutions.com
Your Trading Solutions is committed to assisting Traders to gain the
right knowledge and to educate themselves to make informed
decisions about financial matters.
All or love and best wishes to you for a continued happy and
profitable 2014!
Graeme and Natalie Pearson
eMagazine Producers
Natalie & Graeme Pearson
Editors
Natalie & Graeme Pearson
Natalie@OrganisedForYou.com.au
support@YourTradingSolutions.com
Design
Natalie Pearson
Contributors
Louise Bedford, Graeme Pearson, Matthew
Sharratt, Gary Stone, Van K. Tharp.
Contribution & Advertising Enquiries
Natalie Pearson
Natalie@OrganisedForYou.com.au
Important Message
All of the information contained in the Your
Trading Solutions eMagazine should not be
taken as financial, legal or accounting advice.
The producers, editors, contributors and any
other associated parties expressly disclaim
any and all liability and responsibility to
every person or party, whether a reader or
consumer of this eMagazine.
We do not endorse the views, statements,
claims, strategies or ideas that are put forth
in this eMagazine. We are merely relaying
the information.
Any business or financial strategy or
investment should only be applied after
taking into consideration your own financial
situation and you should seek professional
advice before making any decisions.
Note: Articles have been reprinted in the English language supplied
We are not liable for any losses you may
incur directly or indirectly as a result of
reading the Your Trading Solutions
eMagazine.
February 2014
Markets Report for February 2014
S&P closes at a record but Ukraine concerns overshadow
a positive month.
The S&P 500 closed at a record high of 1,859.45 on the last
trading day of the month, up 4.3% for February.
The Australian market (XJO) also put in a stellar month, up 4.12%
to 5404. The Aussie Dollar also rallied 2.12% against the US
Dollar.
The positive result for equities in Feb was quickly overshadow
before the markets had even opened in March as tensions built
when Russian troops entered Crimea in the southern region of
Ukraine.
SCM Equities International
Contact:
Dealing Desk
global@scmequities.com.au
Matthew Sharratt
Portfolio Manager
matthew.sharratt@scmequities.com.au
+61 2 8226 8280
www.scmequities.com.au
AFSL 313 495
This caused a shaky start to the new month with global equity
markets being hit hard (especially Europe). The Russian move has added a big geopolitical risk factor
into the equation, which has unsettled the global markets, as expected Gold rallied hard.
Does Crimea Matter?
If history is a guide then the markets will soon move past this situation HOWEVER, as we have
always emphasised, markets don’t like uncertainty and if tensions escalate markets are likely to fall.
Also keep in mind that markets have been rallying prior to this making profit taking selling much
more likely.
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Back to Business
Let’s assume (hope) the Ukraine crisis passes quickly then on a macro level we are left with;
1.
2.
3.
4.
OK to good reporting from corporates in US and Australia.
Weaker than expected economic data in the US mostly blamed on the bad weather.
The Fed Reserve saying the right things to keep markets satisfied.
Emerging Market jitters fading but not gone.
The Big Picture on the XJO
I shared this chart with clients last month; it’s the weekly chart of the XJO from 2006 to today.
Technically it looks like it wants to break out above the key 5450 level; if we do then it will quickly
rally to 5600 with 5450 becoming strong support.
Aussie Dollar
We have updated our forecast on the AUSUSD rate to the end of 2015
Our assumptions are:
RBA Commodity price index declines by 2.5% per quarter (20% over the 2 years).
US$ appreciates against major currencies by 2.5% per quarter (20% over the 2 years).
RBA leaves cash rate unchanged in 2014 but raises cash rate by 0.25% each quarter in 2015.
US leaves cash rate unchanged till middle of 2015 but raise cash rate by 1% over the second
half of 2015.
On this basis AUSUSD rate declines to around 0.84 US cents.
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With the Aussie currently trading at 0.8950 this has the potential to add another 6% to US equity
portfolios over the next 2 years.
Have a great month
About SCM Equities
SCM Equities specialise in Australian and International equity markets; they are specialists in
Integrated Portfolio Management advice and services. To obtain their latest research or to find out
how they can help you with your portfolio or self-managed super fund, contact Matthew Sharratt or
one of his experienced team.
Regards
Matthew Sharratt
Portfolio Manager
SCM Equities Pty Limited
AFSL 313 495
Level 11, 1 Chifley Square, Sydney NSW 2000
PO Box R995, Royal Exchange NSW 1225
T 02 8226 8280 F 02 8226 8255
E matthew.sharratt@scmequities.com.au W www.scmequities.com.au
7|P age
Warning: This report provides general advice only and document has been prepared without taking into account your
objectives, financial situation or needs. Before acting on any advice in this report, you should consider whether the advice
is appropriate for your individual financial circumstances and needs.
The report and any advice is subject to change without notice, but SCM Equities shall not be under any duty to update or
correct it. All statements as to future matters are not guaranteed to be accurate and any statements as to past
performance do not represent future performance.
General Disclosure
This research has been issued by SCM Equities Pty Limited (ABN 46 124 553 224, AFSL 313 495) (“SCM Equities”). It is
intended for clients of SCM Equities only and may not be reproduced or distributed without the consent of SCM Equities.
So far as laws and regulatory requirements permit, SCM Equities, does not warrant or represent that the information in the
report including any advice is accurate, reliable, complete or current (Information). The Information is indicative and
prepared for information purposes only and does not purport to contain all matters relevant to any particular company or
issuer. SCM Equities believes the information or advice in the report has been obtained from sources that are accurate at
the time of issue, but it has not independently checked or verified that information and does not warrant its accuracy or
reliability.
Important disclosure information regarding the subject companies covered in this report is available at
www.scmlequities.com.au/disclosures.
8|P age
How to Make Affirmations
Work
By Graeme Pearson
Affirmations are a bit contentious. Some people love them some people hate them. If not
done properly then they can be very ineffective. Even if not done well there will still be some
benefit in the long run.
Whether you like it or not you are already using affirmations. Self talk
can be regarded as a type of affirmation but in many cases is
misguided and not that good for us and in some cases like downright
poison.
If you are using affirmations anyway in the form of self talk why not
redirect the rubbish and control the course they take which in turn will
control the direction your thoughts, feelings and actions go.
Affirmations can be seen as an anchor which will help remind yourself of your goals or
behaviours your want to achieve and to replace old patterns of thinking.
With that in mind there a few things you can do to make them as effective as possible. There
is even a slight twist you can add to the typical affirmation which research has shown can
dramatically improve the outcome. I’ll expand more on that later.
Make Them Believable
Paradoxically affirmations have been shown to be more effective for someone with high selfesteem. A study on this topic has been done by Dr. Joanne Wood at the University of
Waterloo and her colleagues at the University of Brunswick and was published in the Journal
of Psychological Science. The researchers concluded that positive affirmations only benefit
individuals with high self-esteem but have the opposite effect on people with low selfesteem.
“Belief creates the actual fact.”~ William James
Someone with low self esteem with little belief in themselves will quickly reject anything not
in their realm of possibility. The key here is to make them believable and word them in a way
that your subconscious won't reject them.
If this is a problem you experience then instead of using statements like “I am” or “I have” in
your affirmations substitute words that are harder for your mind to argue with such as “I
choose” or “I allow”. For example “I choose to be more disciplined so that my trading is
profitable” or “I allow myself to earn 30% pa with my trading”.
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As you start to have some success and your belief level and self-esteem improves you can
create more challenging affirmations to keep you pressing on.
Be in a Meditative State
The alpha brain state is the desired state for working on
personal change. In this state your mind is to suggestions,
affirmations and programming. There are two basic states
the mind operates under which are the deductive and
inductive states.
The deductive state allows information to be absorbed
without question or filtering. In the inductive state the
information is filtered and scrutinised according to your
beliefs and may be rejected.
“Meditation makes the entire nervous system go into a field of coherence.”~ Deepak Chopra
Meditation helps put your mind in a deductive state and then if you recite or listen to your
affirmations while in this state they will begin reshaping your mind without question.
Repetition
Science has shown that repetition helps learning. For example when learning a new word
after 160 repetitions of that new word over a 14 minute period the memory traces were
indistinguishable from an already familiar word.
“Any idea, plan, or purpose may be placed in the mind through repetition of thought.”~
Napoleon Hill
The mind won't remember everything it is exposed to otherwise you would tend to go mad. It
remembers what is determined to be important. Repetition is a way of telling the mind that
this thing is important so that is why it can work with affirmations.
Feel and Be
As I mentioned earlier an affirmation can be seen as an anchor. An anchor can be seen as a
stimulus response mechanism. Instead of just a random
stimulus-response sort of reaction you actually want to control
the state that gets delivered.
Your subconscious mind responds best to events or
instructions which carry emotion. Your most vivid memories
will include a lot of emotion. So you want to use this
phenomenon to your advantage.
When you create your affirmation make sure you include an
emotion that is linked to it. For example “I feel confident now
that I am trading with discipline”. Then when you say it live
10 | P a g e
and feel that emotion each time.
“It is through gratitude that the spiritual dimension of life opens up.”~ Eckhart Tolle
With repetition this will then link the feeling of confidence to that affirmation and create that
anchor. Once the anchor is created the feeling will start to come naturally without making
any effort.
Gratitude is a great emotion to anchor to your affirmations. The reason why is that you
express gratitude for things you receive not for things you haven’t got. So by expressing
gratitude you are telling your subconscious mind that this is a done deal so forget about any
resistance.
Lock in Proof
Your mind is seeking proof to reinforce or support
beliefs that are held and filters out things which don’t
support current beliefs. If you want to create a new
belief then you need to find supporting evidence to
give it substance. Affirmations are generally aimed at
creating new beliefs or behaviour patterns.
When you actually experience something which
supports or confirms your affirmation then lock it in by
stating your affirmation at that time. This can then set
the reticular activation system into play to start
looking for more instances which will strengthen that
new belief.
Questions Not Commands
Another way to get more out of your affirmations is to word it as a question rather than a
command. Like I discussed above this then activates your mind to start searching out the
answer to your question. This ties in with an Anthony Robbins quote of "Successful people
ask better questions, and as a result, they get better answers". It creates a motivation for the
mind by setting it as a challenge.
“Your mind will answer most questions if you learn to relax and wait for the answer.”~
William S. Burroughs
Research by Professor Dolores Albarracin which was Published in the April 2010 issue of
Psychological Science journal came to the conclusion that affirmations written as a question
rather than a statement are more powerful. The study found that by changing the affirmation
from "I will" to "will I?" there was an 85% improvement on the outcome.
When you find yourself caught in a loop of negative self talk that is a great time to switch
around what you are saying into an empowering question. For example if you start saying
things like "I can't ______" switch that to "how can I _____?" Just fill in the blank.
11 | P a g e
Even if you still think affirmations are a bit woowoo and not something you want to add to
your daily ritual there is one thing that you should start. At least be more aware of any
negative self talk you might get caught up in. If you do find yourself wallowing in any
disempowering self talk then change it into an empowering statement or question.
I hope you found those tips helpful and will add affirmations to your arsenal of tools to
become a better trader. If you want more information on affirmations and how they can be
applied to your trading then feel free to contact me at graeme@yourtradingsolutions.com .
Don’t forget I offer a free coaching session to up to five people each month so if you want to
get a breakthrough with your trading then checkout the offer page within this issue for more
details or go to www.yourtradingsolutions.com/coaching_offer .
About the Author: Graeme Pearson is a Professional Trader and Trading Coach for Your Trading
Solutions. Since resigning from his Full-time job as a Mechanical Engineer
back in 2006, Graeme realised that although he had reached his goal of
financial independence something was still missing. Graeme found that he
gained great pleasure in helping others and particularly when that help
involved trading. Graeme now utilises his trading experience, Neuro
Linguistic Programming and coaching training to combine mindset and
methodology to help other traders become the best they can be. For more
information about coaching contact Graeme at: graeme@yourtradingsolutions.com
12 | P a g e
Mindset Crimes
By Louise Bedford
WE LIVE IN A SKEPTICAL age. We've learned not to trust. We've been ripped off before.
Our leaders have lied to us, new scandals are popping up on a daily basis, and the
companies we used to believe in are falling over like fir trees being logged.
We're on alert 24/7. No wonder we have difficulty rising above all of this and excelling as
traders. We're primed to getting our fingers burned, and we're wary as all heck.
However, if you feel you're working too hard for a living and you're just not getting
ahead, I've got some answers for you. You just don't need to feel so trapped by your
circumstances again. Here are the top mindset crimes that I see robbing traders of their
wealth.
1. We are stressed out of our minds
We're plugged in to every electronic device, every blog, every
newspaper... We're working long hours, tied to our mobile phones,
and never are alone long enough to gain some clarity on our lives.
We jump around the place like cats following a laser pointer. Our
attention spans have become shorter than a hyperactive teenager
with an X-Box addiction.
Does any of this sound familiar?
You need to unplug, even just for a morning per week. I guarantee
you that you'll gain more enthusiasm, and approach your
problems with a different mindset if you just give yourself a chance
to recover.
2. We want instant results
This is why farmers do so well as traders. They know that it takes a while to bring in the
harvest, and if you skip one step of the preparation phase, the whole crop will be ruined.
It's not your fault that you expect trading to be easy. We're bombarded by people selling this
dream. However, it really is only a dream.
3. We feel unworthy
We are terrified of making the wrong decision. Why? Because we
don't want to show the world how we feel inside when we're lying in
bed, alone, at night in the silence. We don't want our actions to
reveal who we feel that we really are.
This one emotion drives us to save face.
I don't know about you, but frankly, I've got a bucket load of
weaknesses. However, unless we train our subconscious to feel
worthy, we'll never achieve what we really deserve in life. We'll be
drained of the energy needed to seek out the answers to our
problems, and find the people who can really help us in life.
13 | P a g e
If you feel that there are some areas you need to improve with your trading and your
mindset, grab my free newsletter and free 5-part e-course from www.tradinggame.com.au.
I’d love to be by your side as you progress on your trading journey. Louise Bedford
(www.tradingsecrets.com.au) is a full-time private trader and author of The Secret of Writing
Options, The Secret of Candlestick Charting and Trading Secrets.
Louise Bedford (www.tradinggame.com.au) is a full-time private
trader and author of four best-selling books – The Secret of Writing
Options, The Secret of Candlestick Charting, Charting Secrets and
Trading Secrets.
14 | P a g e
Why is it so? What I believe
about investing.
by Gary Stone
In
my posting last week I made this statement: “I have a predetermined set of simple
actions that I will execute without any reservation, hesitation, fear, uncertainty or
doubt. These simple actions are documented in the Trading Plan that guides my
investing actions, habits, processes, routines, attitude and culture.”
How does one reach the point of having such an uncomplicated, stress-free and easy-to-use
process in such an uncertain, noisy, volatile and complex environment as the financial
markets?
Where do the simple actions come from? Why do
I follow them as I do? Why do I know that the
simple actions that comprise my process will
work?
There are principles at work in the processes that
I use and these principles are aligned and
consistent with my beliefs. A principle is an
unchangeable and timeless truth that serves as a
foundation for a chain of reasoning. Once these
principles are grasped and trusted, the execution
of the process becomes simple.
The question begs then, what do I believe in? Why do I do what I do and why do I trade in
the way that I do? I gave you an insight into my trading story just over a year ago but this
didn’t get into the essence of what I believe with respect to investing. I have been asked this
numerous times.
My beliefs about investing get to the core of why Share Wealth Systems exists and why we
passionately continue to do what we do.
At the highest level, I believe that the main investing avenues, that of managed funds
and products offered by the ‘big end of town’, need to be challenged and exposed.
This is done in the first instance by handsomely outperforming them.
I believe in the “little guy” having to do it himself through knowledge, personal growth
and learning to be able to outperform the ‘big boys’ by following the mantra of “give a
man a fish and you feed him for a day, teach him how to fish and you feed him for
life.” He needs to do this to achieve his lifetime dreams, goals and objectives. I see
myself as one of the “little guys”.
These two core beliefs are founded in the following supporting beliefs which have been
cemented and energised in my psyche through personal research and experience, studying
others’ research and experiences, and mentors:
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Managed funds (also called mutual funds), including pension and superannuation
funds, the world over struggle to match let alone outperform their respective
benchmark indices for periods longer than three years, but typically less.
The top 10 managed funds by performance over any single 12 month period are
seldom in the top 10 for the following 12 month period.
Top performing managed funds are typically smaller boutique funds that oftentimes
are closed to the majority of private investors.
As smaller boutique managed funds grow into large funds by attracting more and
more investors’ funds, their performance wanes rapidly as their potential market
universe shrinks to just the large liquidity stocks that more closely mimic index
returns.
Over any rolling 5 year period, managed funds, on average, perform slightly worse
than their applicable stock exchange index, such as the All Ordinaries/ASX200 in
Australia or S&P500 in the United States.
o Over the long-term, the applicable stock exchange index, i.e. All Ordinaries or
S&P500, underperforms its total return index (All Ordinaries Accumulation
index in Australia and the S&P500 Total Return index in the United States) by
approximately 4% CAGR in Australia and by approximately 2% CAGR in the
United States.
 This is due to two main reasons:
 The fees that managed funds charge their investors for the
fund to market (back to their investors) and manage their fund
and to pay their distribution network of financial planners.
 Mistakes that active fund managers make.
 (CAGR = Compounded Annual Growth Return.)
o Over the long-term, managed fund investors, on average, achieve returns that
are less than the managed funds themselves, by approximately 2.5% CAGR
less than the index, or approximately 4.5% CAGR less than the Total Return
index.
 Managed fund investors perform so much worse than the average
managed fund, which slightly underperforms the market anyway,
because the managed fund investor chases performance by
continuously switching between funds and therefore, on average,
enters funds that are growing rapidly in size of FUM (funds under
management) but declining rapidly in performance, mainly due to
liquidity constraints, fees and mistakes.
o The beliefs in this bullet point are backed by The Little Book of Common
Sense Investing by John Bogle which demonstrated these facts over a 25
year period from 1980 to 2005.
The managed fund industry is fed via a distribution network of financial planners (and
some accountants) who are paid on the basis of an annual percentage fee for FUM
which continues to scale up in absolute terms without commensurate effort and
return or reduction in risk as the size of FUM increases.
Financial planners (historically nearly 100%, now a little less since an attempt to
change the laws in Australia) distribute investors into managed funds that pay the
financial planner fees for advising investors into these funds thereby creating the
potential for conflict of interest on fund selection.
16 | P a g e
To get sufficient protection and growth for their investments and overcome the issues
above, private investors need to find a way to outperform the Accumulation / Total
Return Index by at least 4% CAGR over any rolling 5 year period, but preferably
closer to 8% or 10% CAGR outperformance. I believe that the ONLY way to do
this on a consistent basis is to do it themselves using an active strategy.
If a private investor is comfortable with returns slightly worse than the All Ordinaries
Accumulation Index or S&P500 Total Return index, but far better than the average
managed fund or stock market index (All Ords or S&P500), then the best way to
achieve this is via a Vanguard (or other) Index Fund. Over the long-term, market
index funds will consistently outperform active managed funds. Why? Far less fees
and far less mistakes. Provided that the investor is prepared to remain invested
through large market corrections.
The biggest threat to any investor’s nest egg is the
big bear, such as occurred in 2008, 2002, 1987,
1973 or 1938 which all suffered near or greater
than 50% falls in equities indices. The problem is
that it is unknown when the next big bear will
appear and if it occurs at the wrong time in an
investor’s lifetime their nest-egg can get decimated
and not recover in time to meet their retirement
requirements.
o There were five > 45% falls between 1901
and 1921 with no advancement in the DJI
over this time.
o The DJI made no gain for nearly 17 years
between January 1966 and October 1982.
o The S&P500 made no gains for nearly 13 years between March 2000 and
February 2013.
No large managed fund can remove ALL their capital from the market, meaning that
a buy and hold investment mindset in a managed fund will wear the losses induced
by a big bear or a secular bear market.
The only way to avoid the big bear is to use an active strategy that will put your
investment nest egg into cash and/or bonds before a baby bear turns into a big bear.
Systematic risk has the biggest potential negative effect on long term capital
protection and growth. Therefore, market timing
is mandatory in a timeframe that is consistent
with the investor’s lifestyle.
Leaving investment capital in cash for long
periods of time will remove the risk of loss but will
also remove the potential for growth while
ensuring that an investor’s nest egg is slowly
eroded by inflation.
Price trends occur in financial instruments due to
human beings inefficient decision making
capabilities caused by the emotional limbic brain overriding the analytical neo cortex
brain thereby causing inefficiencies in the movements of prices.
o These price trends offer fantastic opportunities from which to profit.
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Leverage will do more harm than good to more investors than not due to small
mistakes that are magnified through the leverage.
Every investor should have a “level of excess” which, when reached, they no longer
need to continue investing only for themselves but also for others who are needy.
Motivated and inspired by these investing beliefs I have been on an ongoing journey for over
20 years discovering market principles that are consistent with these beliefs. I will share
these principles with you next time.
Gary Stone is the founding Director of Share Wealth Systems and leads the Research and
Development Team. Trading and researching the markets since
1990, Gary is motivated by a conviction to help people do better. He
has a strong belief that gaining knowledge in the market is not
enough. “Investors need to be able to step into a set of repeatable
and measurable processes that emanate from the market. Without a
set of rigorous processes the probability of success is low”. A
contributor to media outlets such as Sky Business News, ABC
Radio, Your Trading Edge Magazine and the Australian Technical
Analysis Association, Gary is regarded as a well-researched and
credible market commentator.
18 | P a g e
Poloron Products:
Memory is Made Up
by Van Tharp, Ph.D.
One Many of you have heard the story of my first stock
purchase at age 16. Fortune Magazine listed a mobile home
manufacturer called Poloron Products as having the greatest
increase in earnings per share, so I bought 100 shares at $8. I
watched it go up to $20, and then down to $4. At that point, I
bought another 100 shares and it went down to $2 where I
bought an additional 100 shares. Then it fell to zero. I made
nearly every mistake that I possibly could in this trade.
For the past 10 years, I have wanted to frame some shares of
Poloron along with my story as a reminder. During the days
when I originally purchased Poloron, the broker gave me the actual shares, but because I
thought they were worthless, I lost track and have no idea what happened to them. I have
been searching for Poloron shares through eBay and companies that sell old stock
certificates for a while now. I finally found a certificate recently and bought it for $5. Even
though the certificate was for only for 8 shares instead of my 300 shares, it is still symbolic of
my first market experience.
When I received the certificate I was shocked. My memory tells me that I bought the first
100 shares of the stock in about 1962 when I was 16; the price change took place over the
next four years. The certificate I just purchased was dated 1983 even though my memory
19 | P a g e
was that Poloron Products went bankrupt in the 1960s. No way was I watching it in 1983.
Could it be that I made an even bigger mistake and lost a stock certificate that had real value
and perhaps even went beyond $20 per share at some point?
So what happened? There are several possibilities:
1.
Could it be a different company? No, it's Poloron Products. They sold mobile homes,
picnic containers, snow mobiles, etc.,—which is also what my company sold. That leads me
to believe it is the same company.
2.
Did I remember the dates incorrectly? Did the company go bankrupt and then
resurrect itself? No, I read about the journey into snow mobiles and that was in the late '60s
and early '70s, however, I Googled the company to find, that in fact, it did go bankrupt in
1981. But this certificate was dated 1983 and it says the company was founded in 1937, so
it was the same stock and was still active in 1983.
3.
In my mind, Poloron Products was bankrupt when I was an undergraduate in the mid1960s. Did I just ignore a perfectly good stock for 10 plus years thinking it was bankrupt? If
so, that would be another huge mistake that I didn't know about. Or did it just become worth
only a few cents and so I wrote it off as bankrupt?
4.
If the company was a penny stock in 1983, why would someone only buy 8 shares?
They would have paid less than the $5 I just paid for a worthless certificate in 2013.
5.
My memory tells me that when I bought the stock, it went straight up to $20 over a
few years, and then it plunged to zero within another few years. Obviously, that was
completely wrong in some way. But that's how I remember it.
The net result of all of this is just further proof that our memories are fabricated by our minds.
I discovered additional proof of this phenomenon when I recently realized that Libby Adams
and I had totally different memories of our various meetings in the past. I thought her
version was made-up and my version was correct. Who knows now? Perhaps it's all just
shared illusion.
I would be interested to know how much of history is
made up of memories that may or may not be accurate.
Certainly it is colored by the minds of those who write it.
I'm currently reading a book about John Rockefeller.
The author comments about how inaccurate prior
Rockefeller books are, and, of course, he is right. He
says that he found some secret, private interview that
Rockefeller recorded late in his life.
But those
memories of Rockefeller in his later years were probably
as accurate as my Poloron memory. Of course, when I
write about Rockefeller and the money game it will all
be my own invention and perhaps none of it will reflect
what really happened. Or perhaps, as A Course in
Miracles says, the past is all an illusion. Did it happen
at all?
I'd like to explore the illusion of Poloron some more and you may be able to help me.
•
Does anyone know how I can find the prior stock symbol for Poloron? Right now, I
can't remember it or find it.
20 | P a g e
•
Does anyone know how I can get data of Poloron's price history from 1962 through
1983?
•
Does anyone know how to find out exactly when Poloron ceased to exist?
If you have insights on how I can find the answers to my questions, please email me. I might
as well know all my mistakes, including thinking the company was bankrupt when it wasn't
and then losing the “worthless” certificate.
I suppose if I really want to play with this particular illusion, I could always find a back issue
of Fortune from around 1962 that lists
Poloron as the top stock in earnings
per share growth. But what if that
doesn't exist either? I'm not sure I
want to enter the Twilight Zone…or
perhaps I'm already there. You, the
reader who is probably 100% sure that
your viewpoint is correct and that you
don't make such mistakes, probably
think I am in the Twilight Zone.
This situation with my Poloron
experience highlights the problems with
looking at past trades. Perhaps now
you understand why I have my Super
Traders do an exercise in which they list everything they can remember for each year of their
life. It's an exercise to show how we create our imaginary past. What's the difference
between your experience of this moment and a memory of what happened 10 minutes ago,
or yesterday or perhaps 20 years ago?
About the Author: Trading coach, and author, Dr. Van K. Tharp is widely
recognized for his best-selling books and his outstanding Peak Performance
Home Study program—a highly regarded classic that is suitable for all levels of
traders and investors. You can learn more about Van Tharp at
www.vantharp.com.
21 | P a g e
“Look at market fluctuations as your friend rather than your enemy; profit from folly
rather than participate in it.”
~ Warren Buffett
“Markets are constantly in a state of uncertainty and flux
and money is made by discounting the obvious and betting
on the unexpected.
~ George Soros
“Financial institutions like to call what they do trading. Let's be honest. It's not trading;
it's betting.”
~ Graydon Carter
“The three traits speculators must learn to manage within themselves are confidence, fear,
and aggressiveness."
~ Larry Williams
" Nobody ever died of discomfort, yet living in the name of comfort has killed more
ideas, more opportunities, more actions, and more growth than everything else
combined.
~ T. Harv Eker
“Confidence comes not from always being right but from not fearing to be wrong.”
~ Peter T. McIntyre
22 | P a g e
Warning!!! Stochastic
Indicator – Mutton dressed as
Lamb?
By Davin Clarke
I was
an eager trading upstart with a few trading profits from the dot com boom way back
before the year 2000.
I chucked in my job, sold my printing equipment and
researched day and night to find the system to be the
next George Soros.
Does this tale sound familiar?
Of course three weeks in and I had found the answer:
stochastics. I couldn’t believe how wonderful it looked
as my eyes caught the signals generating the start of
amazing trends. Why hadn’t anyone else seen how
much money was available in trading pullbacks.
The private jet was just around the corner. Maybe I could buy Christopher Skase or Alan
Bond’s used one!!!
So after adjusting my Stochastic settings to my secret formula (I think I moved the K period
to 11), off I went to trade for a living.
Now the reality did not quite fit the TV ads of me with my laptop by the infinity pool watching
my account grow. I was watching signals on my large (for late 1990’s) 15 inch screens hitting
the stochastic cross and then not magically going up like it should.
Sometimes it would move lower, sometimes it would chop and every now and then it would
move higher. Many times as I moved to a profit I would move my stop to break even and
then get stopped out.
Eventually, after a few losses I would take off the stop altogether and bail for a large loss just
before a reversal where the market would shoot up.
Today I look at markets a lot differently from way back then. Market structure and corrective
phases are what I focus on in my trading and how I teach other traders. My view is that
trading using stochastic or other momentum indicators in isolation creates fairly random
outcomes without an understanding of the bigger picture.
When we look at indicators our eyes often skip the failed trades and lock in on the
successful ones. System developers often see this bias when evaluating and back testing
potential ideas.
Let’s review the 6 stochastic signals from an entry perspective on a Euro chart and then look
at it with a focus on market structure points.
23 | P a g e
Signal 1 came after a weekend gap up and deep correction. Both this first area and the
Signal 2 setup could have produced nice returns if traders had wide stops in place and
managed to second guess the US Federal Reserve’s meeting when price zoomed up.
Signal 3 produced an entry after the vertical move up. There was very little follow through
and would have been difficult to produce a positive outcome.
Signal 4 had a little downside follow through but failed to trend strongly.
Signal 5 had no follow through and failed and signal 6 failed after moving a few points to the
downside.
With trading the stochastic indicator in this example there is a conundrum. Take large stops
to get the occasional outsized winner but lose more on each loss, or take small stops and
often get stopped out before a big move comes about.
There is nothing wrong with using a momentum indicator but it needs to be in context with
the market dynamics. Trading the first bounce after an exhaustive vertical move (Signal 3) is
a different structure to trading the 2nd retracement of a range bound market (signal 2).
I have developed an understanding of market structure to improve my trading and believe it
is essential to create a lasting edge.
Here are a few key structure observations which have provided me an edge when
trading:
The Gap and trap. Point “A”
Gaps are often exhaustive in nature, when they occur after a trending move. Over optimism
has buyers entering the market at a price point where there is no-one on the sidelines willing
to bid higher. Usually we see a small impulse move above the open high before traders start
accepting lower prices. This is a key setup for me after a positive profit announcement and a
prior run up in price and at times where there is an optimistic crowd.
24 | P a g e
My job as a trader is to identify where the upward momentum stalls and capture a low risk
entry as selling commences. In this instance price moves in the path of least resistance.
Think about this: If there are no more buyers on the sidelines
willing to trade a higher price, no matter how exciting the news is
the price cannot move higher. And as the first traders start
accepting lower prices to close their positions, it forces other
traders holding a long position to contain losses and sell creating
a snowball effect.
Pump Fake. Points ”B”
The pump fake is defined where price action thrusts above support or resistance and then
reverses, moving back within the prior range that has developed. These spikes tend to
shake out stop losses and set up break out traders positioned on the wrong side, forcing
them to close their position and effectively adding to the price reversal.
I have marked in 3 areas with a “B”.
Tip. Have a look at the stochastic at each of these “B” points. The crossover at each had
nice follow through. Combining momentum and structure will improve trade selection and
timing.
Key Message
Working off specific zones that trap traders is a way to counterpunch. In boxing the counter
punch when an opponent is off balance is a deadly weapon. Catch traders that have
committed to a trade and capture profit as they acknowledge the dynamics have changed by
reversing their positions.
Contrary dynamics that surprise the majority are what create directional movement.
Davin Clarke is Chief Executive Officer, Executive Director – TradeDirect365 and has over
12 years of experience as a full time professional trader, earning his
primary income through trading. Davin has extensive experience in trading
shares, futures and foreign exchange markets both in Australia and other
global markets. His key specialties are FX markets, DAX and SPI trading.
Davin provides specialist training for a range of clients from professional
traders and ex floor traders to developing traders. He has released his
latest books “Trading Plans made Simple” and “Options made Simple” both
published by John Wiley & Sons.
25 | P a g e
Bitcoin
Bitcoin is a peer-to-peer
payment system and digital
currency introduced as open
source software in 2009 by
pseudonymous
developer
Satoshi Nakamoto. It is a
cryptocurrency,
so-called
because it uses cryptography
to control the creation and
transfer
of
money.
Conventionally,
the
capitalized word "Bitcoin"
refers to the technology and
network, whereas lowercase
"bitcoins" refers to the
currency itself.
Bitcoins are created by a process called mining, in which
participants verify and record payments into a public
ledger in exchange for transaction fees and newly minted
bitcoins. Users send and receive bitcoins using wallet
software on a personal computer, mobile device, or a
web application. Bitcoins can be obtained by mining or in
exchange for products, services, or other currencies.
Bitcoin has been a subject of scrutiny due to ties with
illicit activity. In 2013 the U.S. FBI shut down the Silk
Road online black market and seized 144,000 bitcoins
worth US$28.5 million at the time. The U.S. is considered
Bitcoin-friendly compared to other governments,
however. In China new rules restrict bitcoin exchange for
local currency. The European Banking Authority has
warned that Bitcoin lacks consumer protections. Bitcoins
can be stolen and chargebacks are impossible.
Bitcoin can be bought and sold for many different currencies from individuals and from
companies. The fastest way to obtain bitcoins is to purchase them in person for cash.[17]
Participants in online exchanges offer bitcoin buy and sell bids.[18] Companies buy or sell
bitcoin in bulk on exchanges and offer their customers the option via ATM to buy or sell
bitcoin at market price.
http://en.wikipedia.org/wiki/Bitcoin
26 | P a g e
Each issue we will feature a Review from Amazon.com about a book that we would
recommend for your Trading Library. If you would like to purchase the book each month
simply click on the image and you will be taken directly to our Amazon A-Store to securely
take your order.
Trades About to Happen: A Modern
Adaptation of the Wyckoff Method
By David H. Weis
Click directly on the image to
purchase this book
Product Description
The definitive book on adapting the classic work of Richard Wyckoff to today's markets
Price and volume analysis is one of the most effective approaches to market analysis. It was
pioneered by Richard Wyckoff, who worked on Wall Street during the golden age of
technical analysis. In Trades About to Happen, veteran trader David Weis explains how to
utilize the principles behind Wyckoff's work and make effective trades with this method.
27 | P a g e
Page by page, Weis clearly demonstrates how to construct intraday wave charts similar to
Wyckoff's originals, draw support/resistance lines, interpret the struggle for dominance in
trading ranges, and recognize action signals at turning points.
Analyzes markets one bar chart at a time, which recreates the ambiguity of actual trading
Emphasizes reading price/volume charts without a secondary reliance on mathematical
indicators
Includes a short study guide in the appendix to help readers master the material
Filled with in-depth insights and practical advice, Trades About to Happen promises to be
the definitive work on utilizing Wyckoff's classic methods in today's turbulent markets.t.
Customer Review By rCRUMB
In an era when traders are more interested in the latest indicator than actually
understanding price action this book stands above the rest. I have read Wyckoff's original
course and other materials, Trading in the Shadows of Smart Money, The Secret Science of
Price and Volume, Charting the Stock Market: The Wyckoff Method, Value in Time: Better
Trading through Effective Volume, Master the Markets, Techniques in Tape Reading and
Tape Reading and Market Tactics. All of these books are derived in whole or in part from
Richard Wyckoff. Not only have I read all of these books - I've also reread most of them and
have applied what I have learned to actually trading. David Weis' book is head and shoulders
above the rest.
For those of you out there who have tried understanding the price/volume relationship in
real time or moving through a chart bar by bar this book will be invaluable. It will take work
on your part to understand the principles, internalize them and then apply them but this
effort will be rewarded with real profits in the market. Mr. Weis is a master teacher. He
using analogies to have his trading principles come alive. He shows example after example
of how to apply these principles to real markets. If you are hoping to pick up a few pointers
or trade setups this book will disappoint. Mr. Weis isn't going to show you a few chart
patterns, he will attempt to show you a whole new way to view a market. Understanding
the "story of the lines" and you will make money.
I did find the flipping back and fourth from the insightful text to the charts tedious. My
solution was to scan, print and enlarge the charts. A few minutes later I had an enjoyable
reading experience.
28 | P a g e
Perth Trading and Investment
Seminar & Expo
22nd-23rd March 2014
Venue: Perth Convention & Exhibition Centre
21 Mounts Bay Road, Perth WA 3006
Times: 10am – 5pm Daily
Discounted Tickets available online at
http://perth.tradingandinvestingexpo.com.au/visitor
Adelaide - Wednesday 19th March at 7:00pm
Brisbane - Wednesday 12th March at 6.30pm
Canberra - Tuesday March 18th at 5:15pm for 5:30pm
Melbourne - Thursday 13th March at 5:15pm for 6:00pm
Newcastle - Saturday 8th March at 10:15am
Perth - Thursday 27th March at 5:45pm for 6:00pm
Sunshine Coast - To be advised
Sydney - Wednesday 5th March - Monday 17th March
at 5:15pm for 6:00pm
Toowoomba - Wednesday March 12th at 6:30pm for 7:00pm
29 | P a g e
Trading skills can be one of the most difficult skills to acquire, yet how many traders take on a coach to
help them with their trading? If we were to talk about any sporting endeavour which you wanted to
achieve your best in then you would hardly think twice about taking on someone to help make it work for
us, but trading, no, that seems to be different. Of course trading coaches may not be cheap, but in most
cases they are a lot cheaper than the losses which many make in the markets.
A quote by Derek Bok sums it up nicely “If you think education is expensive, try ignorance”.
It is not difficult to make money in the markets, but there are many things you need to learn and you also
may need to “unlearn”. It is learning to do what you learn intellectually, that ultimately proves so difficult.
Knowing what you should do is not enough. That is where the coach comes in to help you not only to know
what you should do, but actually do it.
A large number of losses exist through not following a profitable trading system and this is where the
coach comes in to find out what is stopping you working in your own best interest.
Your coach will give you methods to follow to help strengthen your internal discipline and continues to
work with you until it works for you. That is when the fees charged will be dwarfed in comparison with the
money you can make from the markets.
Winners go for what they need. If you think there is scope for improvement in your trading then you
should do something about it. The first step is to decide that you are going to be a winner, and then just
do it.
Become the Best Trader You Can Be!
When would now be a good time become a successful trader and make massive profits from the market?
Pick up the phone and CALL NOW on +61 400 482 653 or email me on graeme@yourtradingsolutions.com
for more information on our transformational coaching. Graeme Pearson.
As Anthony Robbins says “Never leave the scene of a decision without taking the first step”