This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Michael Mackenzie, Saskia Scholtes and Aline van Duyn (Financial Times): Trepidation as Fed prepares to end easing, October 29, 2009. As the Federal Reserve’s programme of buying mortgage debt edges towards $1,000 billion this week, investors are starting to worry about what happens once the central bank starts to slow down and exit from this key plank of its monetary easing policy.

• Quint Tatro (Minyanvile): Seven lessons from a legend, October 29, 2009. Jesse Livermore was wealthy and broke several times over during his tumultuous life, which ended in his suicide. His ability to make and lose millions garnered him many lessons which the trading community have enshrined over the decades since his death. Yet these lessons and

...

SOME THOUGHTS ON THE PSYCHOLOGY OF TRADING

 

ARE TRADERS BORN OR MADE?:  I like this quote, “A lot of the best traders are stubborn iconoclasts who are willing to challenge conventional wisdom, identify an edge and stick to it. The noise of the world doesn’t deter them from their inner convictions.”

PROFESSIONAL TRADERS MAKE MONEY BY PATIENTLY WAITING:  “Independent traders have the luxury of picking and choosing their trades. They don’t have to trade all of the time. This is their edge. They can wait until the market patterns are working for them.”

BUY HIGH AND SELL LOW:  “Our emotions are not our friends when it comes to investing. Relying on emotions is a quick way to buy high and sell low. This is because people give into their greed when they see everyone else

...

divbspan class="Apple-style-span" style="font-size:large;"Counter Trend Trading: Inviting Your Ego to Trade/span/b/divdivbr //divToday while trading and discussing trading on Stocktwits, I came across a very interesting article written by Dr. Brett Steenbarger. This article discusses the compulsion some traders have to counter trend trade. Traders who counter trend trade are sometimes called contrarians. The reason I wanted to blog about this article is that when I first started trading this was a mistake that I made often and it was costly. divbr //divdivI want to give a personal spin on what this is like as well as explain when being a contrarian can work to your advantage. Click a href="http://traderfeed.blogspot.com/2009/10/habitual-contrarian-traders-being-right.html"here/a for the complete article.br /br /I started trading in the early nineties, using the SOES and Select-Net systems to get in and out of Nasdaq stocks. It felt really good to be doing something ...

Great strategies align themselves with vetted and observable themes in the market.divbr //divdivStrategy comes from taking a stand based on what you perceive are demonstrative behaviors in the recent market and then submitting that position to the market's cross examination - you'll come out smelling like a rose or its fertilizer. The nice thing with a href="http://www.trade-ideas.com/Path_OddsMaker.html"The OddsMaker/a backtesting tool, is that you'll know this without risking a penny of capital.divbr //divdivDon't know which behaviors to identify? What cause to fight for? Adopt someone else's opinion - preferably someone you may regard as a mentor or at least a trusted interpreter of the market's various and many signals./divdivbr //divdivI haven't had an original thought since I named our second daughter 2 years ago. So when I want some heavy theme action, I look to another doctor who's good at midwife-ing ideas through delivery and into the world: ...

Welcome back to guest blogger Mo Christiensen of TradingAdviceBlog.com. Mo has been a full time trader of the emini S&P 500 futures since 2003 and through his blog he works with new and developing traders to help them speed up the learning curve to trading profitably. In particular Mo specializes in the important area of emotional management.

===================================================================

As traders we’ve chosen an intense profession, one with a very high potential for stress. The simple act of putting our money on the line, with an uncertain outcome, creates an emotional force which we need to know how to handle. If we don’t, the emotional excitement of fear, euphoria, anger, disappointment, and other intense feelings, clouds our judgment and affects our ability to stay in the opportunity flow of the market.

Trading with these emotions in play, is akin to driving in a storm without windshield wipers.

...

Here at “A Dash” we like the comparisons between analyzing sports and analyzing markets.  There is much more data in sports, and the risk/reward calculations are similar.

When it comes to the NBA, we are zeroed in on the Michael Jordan era.  To celebrate a birthday party for a famed Chicago options trader, one of our friends sent invitations to a party — dinner and Bulls tickets for a playoff game that night.  Attendance was excellent!

Can We Learn from the NBA?

Shrugging off the current Bulls record, we try to remain open to new information.  In particular, is there any relevance for investors?

Investment experts are weighing in on the Shane Battier article by Michael Lewis.  In a reprise of Moneyball, Lewis shows how Battier is more valuable than his obvious stats indicate.  Briefly put, he makes everyone on his team better — …

divHeard this one?/divdivbr //divdiv[Tourist and New Yorker approach each other at the street corner]/divdivTourist: "span class="Apple-style-span" style="font-style: italic;"What's the best way to get to Carnegie Hall?/span"/divdivNew Yorker: "span class="Apple-style-span" style="font-style: italic;"Practice! Practice! Practice!/span"/divdivbr //divThe videos of Trade-Ideas' automation on our a href="http://www.youtube.com/TradeIdeas"YouTube Channel /aoffer views of our practice sessions in the market using real capital and real market situations.  Viewers see the real-time idea generation alerts of Trade-Ideas PRO that's based on the tested, trading plan results modeled in a href="http://www.trade-ideas.com/OddsMaker/"The OddsMaker/a and then ask, "Excuse me, can I buy or receive the strategies shown in the videos?"divbr //divdivspan class="Apple-style-span" style="font-weight: bold;"span class="Apple-style-span" style="font-size: large;"Sure.  But It Will Cost You More Than You Know/span/spanbr /br /Requests like that reveal a weakness in a person's approach to trading and forecast likely disappointment in automated and regular trading.  The reason points to a lack of willingness to develop the safety net of ...

If you have visited my site for very long, you will know that I think very highly of the work from Brett Steenbarger. “Dr.Brett” is has created a new site which is an e-book he updates regularly. The free e-book is called INTRODUCTION TO TRADING it is an excellent resource which he has generously contributed to the trading community.

Lots of buzz and mentions regarding the latest release of the beta verison of Trade-Ideas PRO v2.2 on the internets.Thank you TraderMike, Trader Eyal, and on a related note, to Dr. Brett Steenbarger for bringing attention to the recent news that Scottrade added our backtesting tool, The OddsMaker, to their ELITE platform for their customers.Today I'm flying to NYC for a week of meetings with a whole cast of characters and friends - old and new.  I am especially looking forward to tonight's party being thrown by TRADERS Monthly.  I'm also scheduling some time to swing by the interesting Web 2.0 Expo New York 2008.  I'm sorry I missed PingPongPalooza 2008 but this is New York City - something else is always just around the corner.If you are in the area, dear reader, leave a ...

In a note yesterday morning to members, we were looking for an oversold rally, and said rally still has yet to materialize in any big way.  We still think the S&P will close the week closer to 1300 than to 1250, but that’s a conviction loosely held.

The two biggest questions on our minds for the remainder of the week are:

Will the financials stop dragging everybody down?  $BIX, $BKX, XLF all had a good day today, but they need to hold these levels. Will the Nasdaq leadership resume?  NDX, AAPL, RIMM all had a positive close, but some follow-through will be crucial.

Some items worth perusing tonight:

Brett Steenbarger on using the relative strength of XLY vs SPY as a gauge of investor sentiment. Bespoke tracks the relationship between high yield credit spreads and the S&P.  If the widening of these spreads is ...