Looper

I know, that Bruce Willis sci-fi movie… 

… is also called Looper. 

Know any other Loopers? 

There’s one in your body. 

In hardware terms, it’s your brain. 

In software terms, it’s your mind. 

Its ability to loop can become a tendency. 

Any problems with that? 

Sure. 

Big ones. 

Imagine a trade. 

Goes wrong. 

You’re drained. 

You get out. 

Loss.

Done? 

No. 

At this point, don’t let your mind loop. 

It will, if you allow it the leeway. 

If it loops, you’ve lost the energy value of two trades or more (fatigue) while losing one trade. 

Don’t delve on the loss. 

Move on in search of your next winning trade. 

Define conditions that stop your mind from looping. 

For example, when entry value is small enough to not be bothered about, its partial or even full loss might not be enough to cause your mind to loop. 

And that’s the position you want to be in. 

No looping.

No overthinking. 

Just trading. 

🙂

Making Friends with Poison

You’re thinking cruise control… 

… when life asks you to step in. 

What just happened? 

Is cruise control a myth? 

Life in the ’10s is about variables. 

Balance arrives, to become imbalance. 

Body-chemistry. 

Most of us are far away from equilibrium because of our inner and outer environments. 

We exist for the longest time in a poisonous state of pseudo-equilibrium.

It’s become a game of how well we cope with such state.  

What’s the fine line here? 

Shying away is not an option. 

To achieve, one delves deep into the world. 

One becomes habituated to body-chemistry being regularly out of whack. 

One makes friends with one’s poisonous state of non-equilibrium. 

One achieves. 

Simultaneously, one keeps killing accumulated toxins, or pumping them out. One doesn’t let them overflow. 

Exercise. Metabolizes toxins at a fast pace. 

Anti-oxidants. Straight-away attack and break-up cancer cells. 

Water. Dissolves water-soluble toxins and flushes them out. 

Smoothies. Micronutrients. 

Fruits. Micronutrients. 

Veggies. Micronutrients.

Sleep. Recuperation.

Meditation. Recuperation. 

Chanting. Recuperation. 

Family. Rejuvenation. 

Harmony. Rejuvenation. 

Recreation. Rejuvenation. 

Etcetera. 

Do what you’ve come to do. 

Make sure you do this stuff too. 

Cheers! 

🙂 

Pain is Pain

Pain is pain.

Can you see it?

I know you can see yours.

Thanks for reconfirming.

Can you see the pain of others, by the way?

Does it register?

Do you walk by?

Who are you… or… what are you?

Decide which question applies to you.

For example, do you see the pain of that earthworm writhing in the sun?

It rains. Coupla earthworms come out, only to be met by scorching sun. They writhe. Do you pick them up with a twig and install them in a wet muddy patch? Do you ignore them? Do you even notice them?

Finance is not too different.

It rains on your plans.

You writhe.

If your overall strategy has not been adequate, you can even perish due to your predicament.

Do you expect help?

Well, who doesn’t?

Only, you are that earthworm now. You are in pain.

Pain is pain.

The earthworm feels it, and so do you.

However, the earthworm is not able to do much. It will probably perish.

You, however, are human capital.

Stop writhing.

Prove you prowess as being superior in performance when compared to an earthworm, or perhaps to a donkey.

Stand up.

Clear your head.

Analyze the situation.

Pain dulls.

You’ve got to push through, and come out of it.

Once you’re up, and through, as in out of your predicament, well, don’t make the same mistake again. You’ll make other ones, sure, we all make other ones, but let’s not repeat the same one.

Safe investing.

🙂

Things To Hold On To

There are some up days…

…and there are some down days. 

Could be because of anything. 

On down days you need to hold on to something(s). 

These provide anchor. 

You wedge yourself into something, and are not swept away. 

There’s right diet. Leads to good health. You make sure your diet doesn’t stray on a down day. It is likely to if you don’t watch out for its deviation attempt. 

Exercise. Get moving. Alone the hormones secreted during exercise should make you feel better. 

If your down day is not because of professional issues, get professional (baby)! Meaning, use your profession as an anchor. Dive into it. Deeply. Forget about time. 

Look after the well-being of someone you care about. 

Pursue something extra-curricular. Again, dive into it. 

Travel, if you can. 

You can fill in the blanks. 

I’ve set up a very basic list. 

We’re very basic here. 

We don’t believe in sophistication. 

We break life down to basics. 

We keep things simple. 

So, what does the anchor do?

Yes, it stops you from being swept away. Your anchor gives you stability and solidity. 

Then, your anchor consumes you. You lose track of time. 

What was time, – oh ya – a healer. As time passes, you forget the issue, or the issue dissolves, or dilutes. 

You wake up on another day, refreshed, and join the battle where you left off. Issue seems smaller. Your forces are replenished. You fight. You win. 

Never forget your anchors. Have them ready. Anytime. Any place. 

Take that –>@&%# Mr. Peer Pressure

Dear Mr. PP,

I don’t give in to you, never have, never will.

You’re not that important.

I don’t spend my time thinking about you.

I don’t respect any entity without a backbone, and you certainly don’t have one.

I’ve met you many times.

At first, I felt you, and was taken aback. You wanted me to do something I didn’t wish to do. You were strong.

I was stronger.

When you don’t know anything about the reputation of your opponent, frankly, you don’t give a d*m*. You fight. Till you fall or till the other fellow backs down.

I won my first head to head with you. Thank my stars.

After that I found out who you were. Yeah, who was it exactly that I didn’t succumb to?

After I’d grown up and all, and fully realized your devastation potential, I always leaned back on my first head to head. I mean, you were beatable. Period.

Yeah, I was lucky to have beaten you first up. It’s been a huge psychological advantage.

I’ve carried over this advantage into my market life.

Take a hike, Mr. PP.

[As far as market related activities go, I follow and advocate an unbiased, singular and customized path which doesn’t follow any crowd or any myths as such.

This path certainly does not let me invest under any kind of pressure.

Where there’s pressure, there are vested interests.

Please beware of investments which don’t suit your risk profile and are touted to quench vested interests].

How to Swallow Small Losses…

… as if nothing has happened … is one of my biggest trading goals.

You see, our society teaches us not to lose. 

It doesn’t teach us that we can lose a bit 5 times, and after that we can win big, recovering all our losses and making money overall.

No. 

It teaches us to try and win all the time. 

That’s the exact reason 90%+ of all society members actually lose in the markets. They’ve not learnt how to lose small, move on, and take the next trade.

Mrs. Market won’t budge an inch for you. You’ll have to make the adjustment. 

So how does one take a loss in one’s stride?

Only one type of loss is immediately digestible – a small one. Therefore, define your risk in the market. Cut and scoot when required. Don’t get married to your trade.

Then, once the small loss has happened, and has been taken, it will nag you. 

It’ll be there, trying to bite your brain in the background. 

Focus on your next trade. 

Identification – Implementation – Entry – Management – Exit – Next Trade Identification – Implementation – Entry – Management – Exit – Next Trade Identification – Implementation – Entry – Management – Exit – … … [what’s the difference between implementation and entry? Well, you could be implementing the trade through a trigger, which is not equivalent to entry yet].

Don’t let the nagging bother you by keeping yourself busy with Identification – Implementation – Entry – Management – Exit – Next Trade Identification – Implementation – Entry – Management – Exit – Next Trade Identification – Implementation – Entry – Management – Exit – … … 

Ultimately the nagging will die out, as your mind starts to revolve around your current trades. 

If you give in to the nagging, it will grow, and will slow you down. You might snap at a family member. You might go into depression. You might freeze. DON’T. Don’t give in to the nagging. Don’t let it grow. Don’t let it slow you down. Maintain your family equilibrium at all costs. Move on. 

The nagging is worst if there’s been a close below your stop, and the market is to open the next day, or after the weekend. You have to deal with this one. If you’re not able to deal with this particular situation, you’ll either need to expose your mental stop prematurely and feed it in intraday (before there’s been a close under it), or you’ll need to follow the progress of your trade from half an hour before next market open onwards.

Yes, this last one’s tough, and you need to absolutely work your way around it. 

You can do it with a bit of practise. 

🙂

The Ideal Entry

What kind of destiny do you prefer?

A scenario where you know the game, and are a champion, with people gloating over you, and where you balloon into over-confidence, only to blow up big?

Or a situation where you are uncomfortably stuck with your surroundings, and make mistake after mistake in an effort to stay afloat, until you start understanding, then mastering and finally manipulating your environment towards mega-success?

What’s that? The latter?

Congratulations. You’ve chosen the path of pain. Temporary pain, but still pain. Pain pains. That’s why it’s called pain, and that’s why it is a pain. It has one basic characteristic, though, which most of us need to understand. Slowly but surely, the human being is capable of becoming immune to small levels of pain. That’s all it takes to win in the markets.

Why didn’t you choose the former path?

Did you know, that given a choice, most of us choose the former (“smoother”) path?

Why?

That’s because when we’re given the choice, the part about ballooning into over-confidence, only to blow up big is purposely left out. That’s the portion one needs to intuitively identify on one’s radar and then avoid, if one is able to remain in one’s senses and is not drunk on fame. The test portion, aha. There needs to be some test in life. If there’s no learing / evolution, what’s the point of the path anyways?

You didn’t choose the former path because its demon was disclosed to you.

Did you for one moment stop to think, that the second path also discloses its demon to you, but only partially? To balance things out, it also discloses the reward. What it does not spell out for you is the big IF in the middle. IF as in – IF you manage to stay afloat after making mistake upon mistake,  until you start understanding, mastering and finally manipulating your environment towards mega-success…

Aha.

The thing about this second path is, that you are on high alert from the beginning. You are getting hit, again and again, and it’s a battle for survival. You are evolving. You are in a great position to intuitively identify and understand the big IF, because, as I said, your senses are on high alert from the beginning. And that makes you fight even harder – no one wants to go down without a fight, right? When you’re in a do or die thing, and your hands and feet are moving to stay up, nature itself starts fighting for your survival. Your odds of making it improve tremendously. After making it through, you know the game by the back of your hand, and can go on to manipulate it to your benefit from there.

There’s another thing about this second path, and of course nobody tells us this. After you’ve won the first leg, the second path becomes the first path.

Ahaaaa!

Also, there’s another thing about the first path too, which again nobody tells us. After one has lost on the first leg, the first path becomes the second path.

Ha!!

So, what’s the ideal entry into a career in the markets?

The second path, obviously.

Make mistakes, make many, many mistakes, and make them when you’re a nobody. These will be small mistakes. They’ll hit you, but you’ll keep surviving them. Your market play will get bigger and bigger. You might even become very wealthy and famous. At that stage, the cost of a mistake will be big. If you’re drunk on your fame, there’s a huge chance of you blowing up.

Thus, an ideal entry into a career in the markets is the second path without the “getting drunk on fame bit”.

Believe me, you don’t wanna blow up. Blowing up brings baggage that lingers. Highly avoidable.

In the end, if you’re on the second path, and if you do become wealthy and famous, you are not going to get drunk on fame. Period.

And, if you’re on the first path, please come down from your high horse to properly approach each new trade with your full capability, with confidence but not over-confidence, and without feeling greater than God.

Going Legit in the Times of Robber Vodka

A good, clean, healthy and tension-free life – don’t you want that for your children and families?

Right, people, go legit.

It is possible, despite the Robber Vodkas, the Call Muddies and the Rama Lundgren Rajus of our times.

The first step is going white.

Go white, people. Declare your assets, pay your taxes, just sheer refuse to deal in black money as much as you can, and for heaven’s sake, start cutting out unwanted people dealing in black from your lives.

Second step – avoid people wearing whites. 98%+ of male folk dressed in whites in this country are either inactively or actively politically connected. In the process, you might pass up on the 2% genuinely good ones in whites, but you’ll have avoided all the ones you want to avoid. Political connect in India will not allow you to go legit. People hook up with politicians for favours, and / or because they feel that in their hour of need, their political clout will save them. Did you know, that for the one favour, your political connection will make you do ten illegit things in reciprocation, stuff you’d never dream of doing normally. Ask yourself. Is the trade-off really worth it? No, right?

Then, avoid dealing with people who use body-guards. I mean, use your common-sense. There’s no reason to shun a benevolent, well-known corporate honcho with or without body-guards, like Anand Mahindra for example. You’ll learn to recognize shady honchos. There’s that feel about them, that mafioso vicious vibe. If you can sense that vibe in a honcho, don’t deal with that person. Forget about the profit you’re losing out on, and look at the level of tension and complication you’re avoiding.

Don’t deal with people promising stupendous returns. Nip the Ponzis in the bud. Dealing with a Ponzi will eventually land you in court, to get your money out . Believe me, you don’t want our super-efficient judicial system messing up your life, if you can help it.

Be firm while dealing with any government officer. The government officer will only start to misbehave if there is any weakness from your side. Remember, a government officer is supposed to serve the nation. His or her salary is paid from the taxes you dish out. If your dealing is clean, the official could harass you for refusing to bribe, but that’s about it. Take the harassment, but keep coming back till your work is done. We need to stop bribing. Then, and only then will government officers eventually stop expecting us to bribe.

Right, we’ve pretty much cut ourselves off from a lot of people and things, so where does this leave us?

Don’t worry, we are not alone.

There are like-minded people around, and we need to make these like-minded people a part of our lives. Yeah, and we can lead good, healthy lives with such people surrounding us.

Also, don’t for a moment think we can’t do anything for our country, just because we’ve nixed the political linkage. Private opportunities come along everyday, to help people and society. If you want to still make a difference, grab these opportunities. Poor people come to you for medical aid. Help them. You can contribute privately to social-welfare. Many private citizens are running clean NGOs. As the name suggests, these NGOs have no government involvement, and are less likely to be corrupt. Funds donated to clean NGOs will very likely reach disaster areas on time and in full.

You can make a difference, all by yourself. You don’t need a corrupt government to make a 20-odd% difference for you per unit of currency you trust them with, as tax or whatever. Yeah, only about that %age gets converted into welfare; the rest is nibbled up along the way.

Make a difference – all by yourself.

What are you waiting for?

Clean up your act, go legit.

It’s not going to cut you off from any good, clean and healthy action.

Trust me on this.

Happy Second Birthday, Magic Bull !!

Seasons change. So do people, moods, feelings, relationships and market scenarios.

A stream of words is a very powerful tool to understand and tackle such change.

Birthdays will go by, and, hopefully, words will keep flowing. When something flows naturally, stopping it leads to disease. Trapped words turn septic inside the container holding them.

Well, we covered lots of ground, didn’t we? This year saw us transform from being a money-management blog to becoming a commentary on applied finance. The gloom and doom of Eurozone didn’t beat us down. Helicopter Ben and the Fed were left alone to their idiosyncrasies. The focus turned to gold. Was it just a hedge, and nothing but a hedge? Could it replace the dollar as a universal currency? Recently, its glitter started to actually disturb us, and we spoke about exit strategies. We also became wary of the long party in the debt market, and how it was making us lazy enough to miss the next equity move. Equity, with its human capital behind it, still remained the number one long-term wealth preserver cum generator for us. After all, this asset class fought inflation on auto-pilot, through its human capital.

Concepts were big with us. There was the concept of SprachgefĂĽhl, with which one could learn a new subject based on sheer feeling and instinct. The two central concepts that stood out this year were leverage and compounding. We saw the former’s ugly side. The latter was practically demonstrated using the curious case of Switzerland. There was the Ayurvedic concept of Satmya, which helps a trader get accustomed to loss. And yeah, we meet the line, our electrolytic connection to Mrs. Market. We bet our monsters, checked Ace-high, gauged when to go all-in against Mrs. Market, and when to move on to a higher table. Yeah, for us, poker concepts were sooo valid in the world of trading.

We didn’t like the Goldman attitude, and weren’t afraid to speak out. Nor did we mince any words about the paralytic political scenario in India, and about the things that made us go Uffff! We spoke to India Inc., making them aware, that the first step was theirs. We also recognized and reacted to A-grade tomfoolery in the cases of Air India and Kingfisher Airlines. Elsewhere, we tried to make the 99% see reason. Listening to the wisdom of the lull was fun, and also vital. What would it take for a nation to decouple? For a while, things became as Ponzi as it gets, causing us to build a very strong case against investing a single penny in the government sector, owing to its apathy, corruption and inefficiency. We were quite outspoken this year.

The Atkinsons were an uplifting family that we met. He was the ultimate market player. She was the ultimate home-maker. Her philanthropy stamped his legacy in caps. Our ubiquitous megalomaniac, Mr. Cool, kept sinking lower this year, whereas his broker, Mr. Ever-so-Clever, raked it in . Earlier, Mr. Cool’s friend and alter-ego, Mr. System Addict, had retired on his 7-figure winnings from the market. Talking of brokers, remember Miss Sax, the wheeling-dealing market criminal, who did Mr. Cool in? She’s still in prison for fraud. Our friend the frog that lived in a well taught us about the need for adaptability and perspective, but not before its head exploded upon seeing the magnitude of an ocean.

Our endeavors to understand Mrs. Market’s psychology and Mr. Risk’s point of view were constant and unfailing, during which we didn’t forget our common-sense at home. Also, we were very big on strategy. We learnt to be away from our desk, when Mrs. M was going nowhere. We then learnt to draw at Mrs. M, when she actually decided to go somewhere. Compulsion was taken out of our trading, and we dealt with distraction. Furthermore, we started to look out for game-changers. Scenarios were envisioned, regarding how we would avoid blowing up big, to live another day, for when cash would be king. Descriptions of our personal war in Cyberia outlined the safety standards we needed to meet. Because we believed in ourselves and understood that we were going to enhance our value to the planet, we continued our struggle on the road to greatness, despite any pain.

Yeah, writing was fun. Thanks for reading, and for interacting. Here’s wishing you lots of market success. May your investing and trading efforts be totally enjoyable and very, very lucrative! Looking forward to an exciting year ahead!

Cheers 🙂

The Concept of Satmya

This one’s from the world of Ayurveda, folks.

We’re not geeks.

We move around amongst all segments of life, grab whatever is useful, and then try and apply its usefulness into our world of applied finance.

And that’s exactly what we’re going to do with the concept of Satmya.

Imagine in your minds a first-time smoker. The first puff breaks him or her out into a coughing flurry. A new stimulus is choking the respiratory system. The body rejects it.

That’s roughly the story for any first-time stimulus which is disturbing.

Upon repeated exposure to the stimulus, the body slowly gets habituated. Ultimately, rejection recedes. One’s tissues are now not only bathing in the stimulus, they are enjoying it. In fact, they want more.

Habituation is where we want to keep it at, no further. That’s the point of Satmya. At the point of Satmya, you enjoy the stimulus without falling sick, since your body-chemistry can now deal with the stimulus without getting imbalanced.

When we put on a live trade in any market, we expose ourselves to market-forces. A gamut of emotions comes alive inside of us. The level of reaction in our system is proportional to the size of the trade. First exposure makes us erratic. Therefore, it is very important to keep this first exposure small.

Markets swing. Joy wells inside of us with notional profit. Sorrow consumes us upon notional loss. Body-chemistry now needs to adapt.

If losses are kept small owing to the usage of stops, one’s system gets used to small losses. Meaning to say, small losses don’t shake you anymore. Market exposure results in small losses all the time, provided you’re using stops. Once these don’t shake you, and your entire world is still balanced despite them, you’re not afraid to put on the next trade, even after a string of losses. This very next trade could well turn out to be a multi-bagger, so you need to put it on. If you’re afraid to put on the next trade, you take yourself out of circulation, and fail to catch a big market move.

A habituated system makes one put on the next trade.

When the market swings in your favour, your notional profit causes you to become emotionally imbalanced. The first time this happens, you effervescently go about promising everyone the world, and get into situations you can’t deliver upon later. You might even make the other mistake of booking your profit early, not allowing the underlying to yield even more profit. Why, why, why?

Get used to sitting on a profit. Let it happen many, many times. Don’t go jumping about when it happens. Take it in your stride. Let the trade develop into a multi-bagger so that it can make up for your many small losses and yield even more beyond your overall break-even point. Such a state of mind is only earned once your system is habituated with regard to profit-yielding situations.

Another big mistake we make after a profitable trade is to put on a disproportionately large position-size in the next trade. Habituate your system to not increase position-size disproportionately. Calm it down after a profitable trade. Then coolly calculate your new position-size, taking total equity and steady maximum-loss percentage into account. Only increase position-size as per the mathematics of your trading strategy, not according to how good you are feeling after a profitable trade.

Habituation will also fine-tune you while lessening position-size after a string of losses. On the one level your math proposes a new lower size to trade in such a situation. On the second level, your body-chemistry will signal to you from inside whether you are comfortable with this size in a new position. Listen to your body and mind. If they are not able to take more than a certain quantum of market-forces at a given time, they will tell you. If you are able to listen to them and then can adjust your position-size further down to a level that body and mind are comfortable with, you are then taking the concept of position-sizing to a metaphysical level.

So, see what the concept of Satmya or habituation has done to your trading. It has made trading holistic for you. With the incorporation of this concept, you are trading in a manner that is comfortable for your mind and body.

The net result is that you don’t fall sick because of trading, and because you stay in the game, you are able to catch the big winners when they come.

Happy Trading! 🙂