Posts Tagged: stress

 

READ THIS NOWAs of this Friday, the S&P 500 has gone 980 days without a 10% decline, according to Birinyi Associates, the fifth-longest such stretch on record. This past week’s nervousness, set off by the insurgency in Iraq and the surprise defeat of U.S. Rep. Eric Cantor, is thus the perfect pretext for investors to think about what they will do when the market takes a serious beating.

For, sooner or later, it surely will—and those investors who have honestly prepared for it will stand the best chance of surviving unscathed. In a downturn, you won’t be the same investor that you are now—unless you rely on rules and procedures, rather than willpower alone, to regulate your behavior.

New research shows that the kind of stress brought on by a collapsing stock market fundamentally changes how people make financial decisions. >> Read More

 

1. Understand the benefit of change. First, ask yourself if you need to change. Then, ask yourself what you need to change. Identify your current habits and ponder the benefits of changing them. Perhaps while trading you are feeling negative emotions such as stress, anxiety, temptation, or frustration. And ultimately, these emotions cause you to make poor, impulsive and self-destructive decisions. Write down what would happen if you were no longer feeling such negative emotions. That is, what would happen if you were able to remain calm and clear-headed while trading?

2. Dissect the proposed change and benefits. Find as many holes in the prospective change as you can. Don’t just convince yourself that things will become better if you change. Make sure the grass actually is greener on the other side of the fence. Be clear about what you want to change and how you will go about it. Write down the benefits that will take place if you do indeed change.

3. Recognize the situation that triggers your self-destructive action. Write down those all-too-familiar conditions, or circumstances, that lend themselves to activating negativity within you (e.g., all the things done, or said, that push your buttons). Also, write down how you are going to consciously recognize them during the day as they happen. Now, next to each item, write down what systems and processes you will implement to avoid letting that situation become emotional. >> Read More

 

NF-ICONJack Schwager: You have picked a lot of traders in your career. What do you look for when you hire a trader?

Michael Platt: I want market makers, people who know that anything can happen. The type of guy  I don’t want is an analyst who has never traded – the type of person who does a calculation on a computer, figures out where a market should be, puts on a big trade, gets caught up in it, and doesn’t stop out. And the market is always wrong; he’s not. Market makers know that the market is always right. You are wrong if you are losing money for any reason at all. Market makers have that drilled into their head. They know value is irrelevant in times of market stress; it’s all about positions. They understand the markets will trade against positions. They get it. It is built into their books. It colors the way they think. I look for the type of guy in London who gets up at seven o’clock on Sunday morning when his kids are still in bed, and logs onto a poker site so that he can pick off the U.S. drunks coming home on Saturday night. I hired a guy like that. He usually clears 5 or 10 grand every Sunday morning before breakfast taking out the drunks playing poker because they’re not very good at it, but their confidence has gone up a lot. That’s the type of guy you want – someone who understands an edge. Analysts, on the other hand, don’t think about anything else other than how smart they are.

Wednesday18NovemberNF-1903Last Close : 6547

Above is Daily Chart of Nifty Future

We need Three (3 ) Consecutive close above 6593 +Weekly close will create Fresh Buying Wave

Next Target : 7363-7720 level.

11th Week (including this week )…………will see Unexpected level in Nifty Future

-Yesterday after kissing 6602.80 it crashed Intraday to 6522 level !!

Now

Yesterday’s low very Crucial for Traders.

Decisive Break with volumes below 6524 level and stays below for 15-20 minutes ,We see PANIC upto 

6498——————-6489 level.

& There after more Panic upto 6463—6454 is possible.

Yesterday’s High Crucial Hurdle for Traders ,Crossover and stays above 6602 level with  volumes will take to 6635 level.

Laxman Rekha for Traders at 6644 level.

Anything is possible-ASR

Nifty Future will it kiss 6650 First…………………or Will it tumble to kiss  6450————–6410 level ??

Again Writing :Buy 6700-6800 put and Forget.Buy 6400 Put too.

R-TRENDLINE

Connecting : 6239——————————6480 …………….Fallen back from 6603 level !

This will act as Crucial Hurdle ,Yes Long Term Formation of Inverse Head & Shoulder formation on Weekly CHART

Updated at 7:54/14th March/Baroda/India

A Psychological Checklist for Traders

17 March 2014 - 20:06 pm
 

Here is a checklist that might be useful for self-evaluation:

1) Have you experienced one or more recent large losses in markets that shook you emotionally?

2) Have you experienced a recent painful loss in your personal life that has left you feeling more vulnerable in your finances and/or your personal sense of security?

3) Have you experienced a recent threat to personal safety that shook you emotionally, such as a violent attack or a serious accident?

4) Do you find yourself emotionally “overreacting” to what should be normal trading stresses and losses? Are you experiencing significant anxiety, frustration, anger, or depressed feelings when trades don’t work out?

5) Do you find yourself “overreacting” in your trading behaviors during what should be times of normal stress? Are you freezing up and not acting on your ideas or impulsively lurching into trades after losing periods in markets?

6) Do you look back on your trading and feel confusion, shame, or puzzlement over actions that you took that run completely contrary to your plans for the day?

7) Have you tried to reduce your emotional and/or behavioral reactivity to markets, only to see the same destructive patterns return during times of stress? >> Read More

1+11 Reasons Why Traders Fail

11 March 2014 - 19:34 pm
 
  1. They have inadequate capitalization.
  2. They are using someone else’s system.
  3. They lack knowledge of the system’s performance.
  4. They are unable to sit through flat periods or drawdowns.
  5. They are unable to handle stress.
  6. They lack commitment.
  7. They experience drawdowns that are greater than their hypothetical testing.
  8. They override the system’s signals.
  9. Their ego prevails.
  10. Their system is overoptimized; they make additional rules to take out losing trades.
  11. They lack parameters for spike performance in markets.
  12. They lack diversification between systems and/or markets.

Stress hormone linked to financial crisis

18 February 2014 - 10:30 am
 

STRESS TRADINGThe stress that financial traders suffer during periods of high volatility in the markets reduces their appetite for risk, according to a study led by Cambridge university neuroscientist and former Wall Street trader John Coates. This may prolong financial crises.

The research, published in Proceedings of the National Academy of Sciences, combines field and lab work. Prof Coates and colleagues discovered that levels of the stress hormone cortisol increased by 68 per cent on average in a group of City of London traders over eight days in which market volatility increased.

 The scientists took this finding to Addenbrooke’s Hospital in Cambridge where they used pharmacology – hydrocortisone tablets – to raise cortisol levels in volunteers, also by 68 per cent over eight days. Participants then played an incentivised risk-taking game. The appetite for risk collapsed, by as much as 44 per cent according to one measure, in those with raised cortisol. (The study was double-blinded with a control group taking dummy tablets.) >> Read More

12 Signs of Stress for Traders

14 January 2014 - 16:11 pm
 

Markets have been particularly volatile recently, at least for intraday traders and daytrading can create a significant amount of stress. Because our bodies are designed to adapt to stress, we may fail to realize that we are stressed out.

Here’s an inventory of common trader behaviors that may signify excessive stress.

12 Signs of Stress

1. A vivid fantasy of making lots of money today.
2. Feelings of invulnerability.
3. Eating breakfast or lunch at your trading desk.
4. Hyperfocus on price bars as they form.
5. Talking out loud to the market.
6. Bargaining with the market about an open position.
7. Cursing at the market.
8. Expressing irritation at partner, kids, pets, plants, inanimate objects.
9. Sudden urge to increase position size or frequency.
10. Canceling or moving stops for no good reason
11. Adding to a losing position.
12. Trading in your underwear !

TIP: Stress degrades decision-making. If you are stressed out, shift your focus 

 

 International Monetary Fund Managing Director Christine Lagarde said Thursday that questions marks remain over the health of Europe’s banks and that coming stress tests are a chance to build confidence in them.

In an article published online by Project Syndicate, Lagarde said Europe is “at a key juncture”, showing signs of recovery but stuck with “uneven and unbalanced” growth.

“While many countries are doing well, demand in general remains weak, and unemployment in the periphery remains obstinately high, particularly for young people.”

“One area of uncertainty for Europe is the health of its banks,” she said.

“The forthcoming stress tests and asset-quality review can help restore confidence and advance financial integration, but only if they are conducted well.”

The European Central Bank has said it will conduct stress tests on the banks sometime this year, to see if they have rebuilt their capital enough to withstand new crises.

Lagarde also called on the region to boost demand and advance reforms that will help generate jobs.

 

Planning on watching a scary movie or going out to a haunted house on Thursday? In honor of Halloween we thought it would be interesting to look at what actually happens in our brains when we get scared.

 Bytesize Science talked with Abigail Marsh, professor of psychology at Georgetown University, to find out how the brain processes fear.

We feel fear because we see or hear something that makes us anticipate harm. Say you’re walking through a haunted house this Halloween and a spooky skeleton jumps out at you. That skeleton acts as a stimulus that triggers a signal in your brain.

The signal travels to the amygdala – a region near the base of the brain. The amygdala fires a brain chemical called glutamate out into two other regions of the brain. The first region makes us freeze or involuntarily jump. These reactions are so automatic because the signal is sent deep into the base of the brain to an area that we have little control over. >> Read More

 

ASR-OMGA lot has been written about concentration of system credit to few large corporate/ Infra cos. In this detailed report, we identify ~US$50bn of power SPVs and risky corporate groups which “is or could get stressed” and dig a lot deeper into bank-wise exposure in these potential stress assets. (All from Publicly available sources – The caveat here is that this is based on bank charges created and actual exposures may marginally differ).

 ICICI/Axis – Large exposures but better placed than PSUs: Exposure in these ~US$50bn assets is ~28% of Networth (NW) for ICICI and ~35% for Axis lower than PSU banks (~40-60% of NW)Risky power exposure is marginally lower than PSUs at 20- 25% of NW but ex-Infra risky corporate exposure is significantly lower at <5-10% of NW v/s 10-30% of NW for PSU banks. While Axis bank’s exposure is lot more dispersed, ICICI’s exposure is lot more concentrated in few groups like JPA/Essar/Adani but indicates better underwriting with lower share of risky power exposure.

 Retail and Regional banks – Reaffirms their almost negligible exposure: Not only all retail banks (HDFCB/Kotak/IIB) but even regional banks (Federal/SIB/KVB/CUB) have almost negligible exposure in these assets (<5-10% of NW v/s 20-30% for ICICI/Axis), with J&K bank being the only exception.

 Large PSUs– PNB/Canara worst, surprisingly BOI/Union better than SBI/BOB : PNB is omnipresent in most risky assets that we have analysed followed by Canara bank and these assets constitute 55-70% of their NW. BOI/Union’s exposure is surprisingly lower than SBI/BOB(considered relatively safer). For SBI, names in power book is less risky v/s peers but is as risky as peers in the large corporate book. BOB’s claim of small ticket sizes seems right for power but ticket sizes is large in the ex-Infra book.

 Medium and Smaller PSUs: Exposure for smaller PSUs are similar to larger peers at ~30-40% of NW in these assets. United/Uco/IOB are worse off where as Indian/Dena seem better off on exposures relating to these assets.

 Infra NBFCs/IDBI: IDBI, like PNB, is omnipresent in most risky names constituting ~90% of their NW. For IDFC, these assets constitute ~35% of NW largely linked to gas assets. PFC/REC’s claims of low gas exposure seems right but their exposure to risky coal assets is very high at 80-90% of their NW.

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Technically Yours,
Team ASR,
Baroda, India.