Month: September 2017

Fighting the Market

Posted on by Anatoliy Schneider

No matter how much I am trading the Market, it never fails to fascinate me, always providing new lessons. It can be a harsh teacher sometimes, but always fair. Unforgiving of any mistakes, it always keeps me in check.

Being a trader is a conscious choice I have made. Being a miserable, losing trader is a choice I was making for many years through unnecessarily fighting the Market. I have never won – not even once.

Every day I face the same choice over and over again – to follow the Market, being grateful for every lesson it patiently teaches me, or to fight against it, making it into a vicious enemy I can never win against.

Being a trader is not always easy, but it is only me who can turn this vocation into a miserable pursuit of psychological stress and financial pain. And it is easy to find myself struggling – all I have to do is start expecting something from the Market.

Expecting to be right. Expecting to know the future, predicting the price. Searching for certainty where there is none. Refusing to accept the contradiction. Trying to avoid discomfort.

Unacceptance of the way the Market is – the only cause of frustration, confusion and, ultimately, suffering that many traders experience daily.

Marble Jar

Posted on by Anatoliy Schneider

In the example with 60 white/40 black marbles in a jar, most traders will agree that it does not make any sense to hesitate pulling the marbles out (provided, the bet on each trade/marble is small enough). Each time there is a signal, it must be taken, being excited that it slowly but surely increases one’s profits.

In “marble jar” trading system the signal is very simple:

  1. See the jar – take the marble
  2. Replace the marble, mix the jar
  3. Repeat

Very high frequency trading – as fast as can be done manually.

In any real trading system the signals are understandably complex. However, anyone trading a system is assumed to know that it has an edge. It is assumed that the system has been tested and proved to be working.

No matter how complex the signal is, it must be defined clearly enough to be identified consistently, without question. After it is identified, it must be taken.

Why would anyone want to dismiss the trading signal? The reason is very simple – not having any idea if the system has any edge.

We know that the marble jar has a clear edge – we know exactly how many black and white marbles there are. But in your real system you might not have done your homework well enough in order to identify your edge.

Now imagine that you are given a non-transparent jar with marbles. There is no way for you to know how many black and white marbles there are in the jar. In addition, you’ve no idea what is the profit upon grabbing white marble or the cost upon choosing the black one.

Would you trade this system with the same amount of confidence? Probably not. One could go as far as saying that it would be stupid even approach such literal “black box”. What if all the marbles are black? What if the cost of taking a black marble is all your life savings?

And yet, in essence it is exactly what majority of traders are doing every single day. They have no idea where the next trade is coming from, what odds are attached to it and what is their worst case scenario.

No wonder they hesitate to reach out for a marble!

Consistent Market

Posted on by Anatoliy Schneider

The work you invest into the Market must be consistent, day in day out. Each time you allow yourself a day off or a week of half-hearted effort, you are making a big step back. Until the state of consistency is firmly established in a trader’s mind, he is not a trader.

Being a trader means willingly, gladly, gratefully investing personal time into studying the Market. All the required work must become effortless, if one is to be called a trader.

To trade with conviction you have to first establish a conviction in your daily trading habits. You cannot afford losing momentum even for a day. You cannot afford failing to appreciate the valuable lessons the Market offers each and every day.

To profit consistently, you must work consistently. The Market is consistent – consistently uncertain, complex, yet open for everyone to learn. The Market is an open book – trading profitably is simply a matter of learning the language in which it’s written.

The Market is Your Friend

Posted on by Anatoliy Schneider

Market is my psychological, emotional mirror. It will reflect back all the frustration I feel towards it. At the same time it will just as readily reflect all the curiosity, confidence, acceptance and fascination that I experience towards it.

I am already consistently profitable. I already have all it takes to be the trader I aspire to be. I can already follow the Market, never losing its flow.

Every single day I have but watch, listen, learn and follow. There is no struggle. Good trading cannot require any effort. When I am in the flow, the trade ideas are coming to me automatically.

I attract profitable trades. I attract the understanding of the Market flow. I attract consistency. I attract confidence.

The Market is my friend, my partner in this business. Always willing to offer me a hand, always providing valuable guidance. Always showing me exactly what it is doing and where it is going. The Market hides nothing from me – it is an open book indeed! And I know its language really well – it is in my bones. I intuitively feel each and every little hint the Market is ever so subtly telling me.

Lithium/Cobalt – One of the better long term investments?

Posted on by Anatoliy Schneider

As usual on Sunday morning, I am spending most time researching fundamental information online.

I started with this great infographic:

Nearly 3000% expected increase in demand for Lithium? That could drive prices up quite a bit! Cobalt nearly 2000%.

More at this link.

Then I checked out the car that UBS tore down to research materials (all prices in pesos):

Wow, that’s not so cheap! But seems like a great car – 238 miles with no charge really let’s you travel gas free. Charges completely in under 10 hours. Great daily car, but it seems like it’s not the time to be buying EVs yet. In the next 2-3 years the prices are bound to go much lower.

This is pretty much the direction the world is going into. It is not even so much about Tesla or Chevrolet – pretty much every major car maker has semi or full EV, or developing one.

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So I thought that maybe this is something worth looking into as an investment.

Let’s look at the chart, first for Lithium:

One after another many major R levels broken since 2016, including major Bearish trendline. Next target – all time highs near $45. This is the furthest back I could find with a quick search.

And Cobalt:

Unsurprising correlation.

Zooming in on Lithium…

(Note that this is not actually Lithium chart – it is ETF. More on that later)

Major Bullish trend, no question about it! Best investment opportunities were in 2016, but there are bound to be more corrections along the way.

Wait, what happened during the last week??? Huge gap and the biggest Bullish week in recent years. On top of that, the biggest trading volume EVER.

Apparently, as I was reading earlier this week (but not connecting the dots properly in my head), China has just unveiled a plan to ban petrol cars! Sounds crazy! But the crazier part is that in case of China it means that they are going to replace gas powered cars with coal powered cars, because that’s where China gets 65% of its power. 😀

Well, leaving environmental issues aside, the news is driving Lithium way up.

Coming back to the recent volume/price spike, here is an article going into it in more detail.

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So how could one trade Lithium? Apparently, you can’t – at least not pure Lithium (i.e. Futures). All the details are in this great article by Reuters.

And this article discusses top Lithium producing countries.
And top Lithium producing companies.