Nov 29, 2009

TRADE TACTICS Bill Williams, stock chaos

Bill Williams developed a precise business tactics based on the "chaos theory", which aims to overcome subjectivism in investment decisions, which in turn creates psychological tension due to the expectations of market development.
In their everyday business practice retailers are confronted with the following psychological problems:
A) Is it possible to get both pleasure and profit?
B) How to preserve domestic harmony, and his own relatives, is at constant promenyashtana market situation?
C) How to overcome the constant nervous tension?
D) Why do most traders lose money consistently?
D) Why do all analysts praise for his achievements, but when the dealer starts to deal effectively on their recommendations, he loses money? 

The main reason the author is that most traders focus on the results of trade and not on actual sales process. Them away from reality and is the main reason for the negative results. Desiring to achieve specific, predetermined goals, they seek to plan and shape the future, causing psychological depletion. Practically demonstrated that won those relating to trade calmly and not battle of life and death with the market, which has to win at any cost. Keeping the battle with any natural element, including the market is doomed cause. Profits are not the result of confrontation with the market, a consequence of the achieved harmony with it.
"The road is smooth and not themselves put obstacles - Buddhist thought. In the term "obstacle" to include personal beliefs and emotional inhibitions. Since the majority of retailers are convinced that trade is not just something easy and profitable business, they create their own limitations, which are transformed into psychological barriers in the way of success.Ultimately, the trader does not trade in the market, but with their own convictions.

Personal belief understanding of truth

Trading is underdog Loss

Trade is profitable Profit

This fact requires each trader to determine what is his personal belief on the market. This will be crucial to its end.
The main reason that most of the traders who have made developments in other areas to suffer, the foreign exchange market failures in the mechanical transmission of their behavioral patterns from one area to another. In a routine business environment with established rules and methods of planning and tselepolaganeto tselepostiganeto is most often applied to model behavior. In terms of market planning for a future turn of events and related outcomes is a losing cause. The reason is that in attempting to plan the course of events we are based on subjective judgments - "The market forms a peak," The market is svrahkupen "," The rise is the result of closing of short positions. Subjective assessments lead to erroneous conclusions and hence losses.Overcoming subjectivism in the market analysis required to use reasonable estimates whose characteristics are:
- Factual;
- Verifiable;
- Mixed.
While traditional human activities is decided based on previous experience in a dynamic market environment, decisions must be based on actual and reasonable valuations. The motto of this type of behavior is:
"The market is where, because he is due to be there precisely because it is where is,"
Therefore, the winning trading style requires achieving harmony with the market movements through the elimination of personal goals and using reasonable estimates of the market.
The pursuit of individual goals formulated strictly leads to inflexibility. The removal of these goals is provided to harmonize with the market, which is known. "Intrusion into the flow" as budiskata philosophy.
Formulation and pursuit of specific objectives is the result of a desire for control over the market.This desire to provoke a specific player's expectations for development of market movements.When these expectations are not confirmed, it causes anxiety, distortion of the evaluation and subjectivity, resulting in a loss. Position that the market is neutral causes us peace, which creates a basis for real and justified and therefore estimates for profitable deals.
The necessity of such an approach is supported by the conclusions drawn in "Chaos Theory".The main findings in this theory are:
1) Everything in life follows the path of least resistance.
2) The path of least resistance depends on the structure, which reflects our belief. Changing the structure, respectively, of our beliefs alter the flow characteristics.
3) diversion from the path of least resistance causes tension in the body and brain. This means that if you feel any tension Trading, this is a sure sign that they are not in harmony with the market and violate the principle of least resistance, which is a precondition for subjectivity.
From everything said so far is that every trader should know his own nature, ie system of desires, present and assumptions, which change is a factor for success.
Widespread opinion is that 90% of success in marketing depends on the individual mental abilities. Indeed, success depends not so much by the potential of mental abilities rather than belief sets. If there is an emotional imbalance in combination with negativism, even 100% of the brain resource mobilization will not lead to a successful outcome. The combination of proper structure and mental concentration is known. "Entry in the form, which is the basis for successful trading.
The advantages of this condition are that the person is not experiencing anxiety, fear and doubt and is characterized by:
- Confidence;
- Pleasure;
- Concentrated relaxation.
At the same time, the suspension of duties and poor results are sure signs out of shape.
The main reason for the lack of focus on form is mechanical memorizing applied from the earliest school age, causing svrahrazvitie the left cerebral hemisphere. This orientation to the result of individual action on behalf of the process. The left hemisphere operates at a speed of 16 bits per second and its purpose is to convey the technology to implement a process of central nervous system that operates at 15 million bits per second. Central nervous system is entrusted with the implementation process. Therefore, if left polukalbo knows what needs to be done, central nervous system knows how. Therefore, novices make drivers slow and sluggish response to dynamic traffic environments. At this point the transfer of technology from the left hemisphere in the central nervous system. When the process is complete tasks and automate complex processes are carried out mechanically, without tension. Therefore, it is first necessary to extend the system of beliefs in order to fulfill the requirements of the law of least resistance and then to achieve harmony with the market by concentrating on process rather than the outcome of trade. On this basis, achieve the peace that allows for objective assessments and market harmonization with market processes.
Market processes are caused by drivers who are called Attractor. According to chaos theory, "there are the following types:
- Point Attractor;
- Cyclic Attractor;
- Toras Attractor;
- Strange Attractor.
Attractor point occurs where the ground for an action is the result of forces of attraction and repulsion (eg like-objection, warm-cold, hunger-sate).

Attractor cyclicality occurs when there is expected to move into a market range (range). In nature, these are processes associated with the change of night to day and seasons.

Attractor toras impression of interdependence between phenomena. The increase in interest attracted investors, leading to a decline in the yield of bonds and a decline in interest in purchases of government securities.

Strange Attractor is the driving force that affects the greatest degree of human behavior. The most significant characteristic is its sensitivity to change of initial conditions, ie small changes in initial conditions lead to large end effect.
Conclusion: If our expectations of market movements are the result of some of the first three Attractor (expected to move in the Range, in the cycle of cause sledstvenost) our behavior is manipulated and our trade is a loser. It became profitable when I watch the market movements as affected by the strange Attractor, ie as a consequence of changes in initial conditions.Factors to take into account the change in initial conditions are:
- Drive the market;
- Change the speed of the driving force;
- Fractal;
- Area;
- The line of balance
DISCLAIMER: This is not investment advice. All opinion in this stock charts market blog is intended for educational purpose only and none of us are liable for any potential damages that may be incurred from this information.