Alpha Trader: The Mindset, Methodology and Mathematics of Professional Trading

Product Information

Sticking with the topic of events, there is a subtler way that upcoming events can influence markets. If you are bearish Apple for six different reasons, and you have been watching a key level all week, and Apple finally breaks down through that level, then by all means, sell! When news comes out that goes against your view and position, you will often hesitate or freeze or explain away the news. Trading with our gut feel, intuition and similar soft skills is less important, and sometimes counterproductive.

My experience with over-bought and oversold indicators is that your threshold for putting on trades should be as extreme as possible. The funny thing is, if these permabears ever change their view, they lose followers and subscribers. The discussion is very pragmatic, taking into account not just individual human biases but organisational constraints.The journey never ends because whenever you think you’ve almost mastered the game, the game changes.

This chapter will outline the types of bias that vex traders, and present specific methods you can use to avoid, or at least reduce, their potential damage.In other words, traders that rely on System 1 and heuristics (thinking fast) will underperform traders that favor System 2 and logic (thinking slow). However, there’s also an interesting result that traders who use technical analysis seem to do better than ones who don’t. The quiz reveals your trader personality, and helps you determine which strategies might work best for you.