Trader's Thread 05 (Jan 20 - Dec 26)

[behappyalways]

From the Poker Table to the Trading Floor: Inside the Mind of Wall Street Traders | WSJ
https://m.youtube.com/watch?v=CamgBXjnSik

[winston]

Overcoming irrational investing

Some of the more familiar biases include:

Overconfidence: In investing circles this is often referred to as “confusing a bull market with brains.” Overconfident investors refuse to believe their thinking is wrong, even when the market changes direction.

Loss Aversion: People fear losses more than anything else. This causes them to sell winners too soon or hold on to losers for too long, hoping they will rebound.

Crowd-seeking: The fear of missing out leads folks to pile into popular trades, creating bubbles and eventual crashes. Everyone who lived through the dot-com bubble and crash can relate.

And as trading stocks has become easier – you can trade stocks in seconds on your phone – the potential for an emotional decision to wreak havoc on portfolios has only increased.

Source: Investor Place

[winston]

Why New Highs Shouldn’t Stop You From Buying

by Dr. David Eifrig

Many stocks hit new highs because their companies are doing something right. If they keep doing those things, prices can keep rising.

So don’t get hung up on a 52-week high. A stock’s previous price doesn’t tell us where it’s going next. When the valuation is still compelling, disregard my old quip and buy high.

That’s why when someone asks me when to start investing, I say it’s always a good time to invest. Even when markets are volatile, you can find plenty of opportunities.

Source: DailyWealth.com

https://dailytradealert.com/2025/01/02/ ... e_vignette

[winston]

3 Subtle Investing Mistakes I Won't Repeat in 2025 And Beyond

by Alex Carchidi

1. Not updating my investment thesis in a timely fashion
2. Assuming the best outcome would occur
3. Complacency

Source: The Motley Fool

https://finance.yahoo.com/news/3-subtle ... 00734.html

[winston]

Almost every high-potential asset follows this path.

by Luke Lango

Stage 1: Consolidation. Prices trade sideways as markets digest the news.

Stage 2: Advancement. The world eventually notices the asset and speculators jump in.

Stage 3: Distribution. Early investors take profits, while latecomers jump in. That causes a signature “V” shape.

Stage 4: Correction. Late-to-the-party buyers realize they got in too slow, and the party ends as they cut their losses.

Source: Investor Place

[winston]

4 Ways to Keep Your Cool in Volatile Markets

by Marc Lichtenfeld

1. Think about your timeline. When will you need the money that is invested?
2. Use trailing stops and position size accordingly. The Oxford Club uses a 25% trailing stop. The Oxford Club recommends that each position make up a maximum of 4% of your entire portfolio.
3. Buy puts
4. Do nothing

Source: Wealthy Retirement

https://dailytradealert.com/2025/02/27/ ... e_vignette

[winston]

Veteran trader gives advice on how to navigate through volatile markets

by Rob Lenihan

Good things tend to happen above a 200-day moving average and bad things tend to happen under it.

"If there's not a lot of volatility, I'm not trading it," he said.

"In my 20 years of day trading, there were two groups of people. There were the people that traded in the first two hours and maybe the last 90 minutes of the day. They typically made money."

We've rebounded sharply. "I don't know if we're in a bear market but we're certainly in a bear pulse, if you will. What's been settled? There's no clarity.

If you buy something without knowing where you're wrong and where you're out, you shouldn't have bought it in the first place.

Don't ever make a bet that pushes you out of the game, both from a monetary standpoint and a psychological standpoint.

"How do you react to things? For me personally, I feel far more pain when I lose than pleasure when I win."

Source: The Street

https://www.thestreet.com/investing/mar ... m_content=

[winston]

We’d all be wise to learn how to trade volatility

by Jeff Clark

Basically, we just wait until a stock or an index gets stretched too far in one direction or the other. Then we bet on the proverbial rubber-band snapping back.

We look to buy stocks that are deeply oversold and we look to sell/short stocks that have pushed too far into overbought territory.

Then, we exit the trades when conditions return to neutral.

This strategy paid off quite well during President Trump’s first term in office. It has been paying off again since the President has returned.

And, I suspect it will continue to work well for the next 3.5 years – at least – no matter what the stock market does.

Source: Investor Place

[winston]

Catching Falling Knives? Smart Strategies for Buying Stocks in a Downturn.

by Adria Cimino

It's risky to buy a stock as it's dropping because it may take a while for it to recover and go on to gain.

If you're a long-term investor, you can buy stocks during a downturn because, by holding on for five years or more, you're giving those companies time to recover and grow and the share price an opportunity to reflect that progress.

Growth in share repurchases supports the idea of investing regardless of what the market is doing at the moment.

Value stocks are in well-established industries, such as energy, healthcare, or financials, and they generate a considerable amount of cash and pay dividends. They are strong, steady, and reliable, and that's why they tend to outperform during tough times.

If you're a very cautious investor, you might try cost averaging, at least with certain investments, while aggressive investors may opt for deploying a lump sum right away.

Source: The Motley Fool

https://finance.yahoo.com/news/catching ... 00568.html

[winston]

How We Turned a Multi-Week Meltdown into a Buy Opportunity

by Alexander Green

Every time President Trump threatened or imposed tariffs, the market would sell off.

And every time he delayed, reduced or negotiated them away, the market would rally.

History shows that the smartest thing to do in a market meltdown is to buy quality assets while they are inexpensive.

Yes, you can always wait for stocks to go even lower.

But that’s market timing, and it doesn’t work.

Bottom line? When assets are cheap, don’t get caught stealing in slow motion.

Source: Wealthy Retirement

https://dailytradealert.com/2025/06/18/ ... portunity/