Arth

https://www.stockgumshoe.com/2018/10/microblog-arth-3/

Seeking Alpha arth about to make a move

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by a Stock Gumshoe reader. The content has not been edited
or reviewed by Stock Gumshoe, and any opinions expressed
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Arth

https://www.stockgumshoe.com/2018/10/microblog-arth-5/

Seeking Alpha arth about to make a move

This is a discussion topic or guest posting submitted
by a Stock Gumshoe reader. The content has not been edited
or reviewed by Stock Gumshoe, and any opinions expressed
are those of the author alone.

Arth

https://www.stockgumshoe.com/2018/10/microblog-arth-6/

Seeking Alpha arth about to make a move

This is a discussion topic or guest posting submitted
by a Stock Gumshoe reader. The content has not been edited
or reviewed by Stock Gumshoe, and any opinions expressed
are those of the author alone.

Supercapacitors growth

https://www.stockgumshoe.com/2018/10/microblog-supercapacitors-growth/

Hi,

I was wondering if anyone has looked into the growing. Usage of supercapacitors. The company I am interested in is capxx which concentrates on licensing its products ( world leading) to companies like Murata and recently TDK.

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by a Stock Gumshoe reader. The content has not been edited
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The God Key

https://www.stockgumshoe.com/2018/10/microblog-the-god-key/

Anybody know the companies Jeff Brown is referring to under the ’God Key’?

This is a discussion topic or guest posting submitted
by a Stock Gumshoe reader. The content has not been edited
or reviewed by Stock Gumshoe, and any opinions expressed
are those of the author alone.

WEISS ULTIMATE PORTFOLIO

https://www.stockgumshoe.com/2018/10/microblog-weiss-ultimate-portfolio/

Has anyone tried the WEISS ULTIMATE PORTFOLIO which claims to beat the NASDAQ by a factor of 2 and with less risk than is involved in buying Amazon etc? Five years for $1997.
Does anyone know if its track record supports its claims? Its method sounds good – buy the top 10 stocks out of the 10,000 rated by WEISS. Replace any stock when it falls out of the top 10.
WEISS RATINGS are regarded as honest, not able to be bought as were the ratings of the major ratings firms in the lead up to the GFC. Does anyone question the integrity of WEISS RATINGS? But, stock price is determined by many factors other than an honest rating. So, what is the correlation of a top 10 WEISS RATING and price? It would be very interesting to know what the Ultimate Portfolios past track record is.
I welcome any comments on this matter.

This is a discussion topic or guest posting submitted
by a Stock Gumshoe reader. The content has not been edited
or reviewed by Stock Gumshoe, and any opinions expressed
are those of the author alone.

How to Find the Best Dividend Growth Stocks

https://tradingsim.com/blog/dividend-growth-stocks/

Lowes (LOWE) Dividend Yield

Dividend growth stocks are known to outperform the market in the long term.

Therefore, investors are always on the lookout for picking the best dividend growth stocks. It involves more than just looking at a company’s valuation and its dividend payment history.

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There are many variables to consider such as the dividend payout ratio which can help to evaluate the high dividend growth stocks.

It is an open secret that dividend growth stock investing offers superior results compared to investing in stocks that do not grow dividends.

According to this research paper by reality shares, between the periods of 1992 through 2016, dividend growth stocks beat the S&P500 by 8.7%.

On the other hand, stocks with the lowest dividend growth underperformed the S&P500 by 1.7%.

Dividends were not always popular. But they returned with a bang after the dot com bubble burst. The surge for dividend growth stocks started increasing when the global economies plunged in 2008.

The chart below shows the S&P500 index dividend yields over time. You can see how dividend yields started to pick up since 2000.

S&P 500 Index Dividend Yield (12/31/1969–12/31/2017) Source: Harftford Funds

S&P 500 Index Dividend Yield (12/31/1969–12/31/2017) Source: Harftford Funds

With interest rates near record lows, investors searched for companies with high dividend growth. Dividends are said to be one of the constants in the world of investing. It is said that dividends contribute about a third of the stock market’s total return.

What are dividend growth stocks?

Before you start looking for high dividend growth stocks, you need to know what this means. A dividend growth stock is a company that increases the dividends paid on a semi-frequent basis.

There is no fixed definition. Some companies can raise the dividend payouts as frequently as a quarter. Other dividend growth stocks can raise dividends on a yearly basis.

The general rule of thumb is that a company which increases its dividend payouts at least once per calendar year can be a dividend growth stock. And the company should be doing this consistently for at least the past few years.

As you can see by the above definition, there are no concrete rules. There is some subjectivity involved.

Dividend growth stocks are defined into the following main categories. These are general market terms. Therefore, there are no fixed definitions for the below.

The general conception is as follows:

Challengers: Dividend challengers are stocks that have raised the dividends for the past nine years

Contenders: Stocks that raised dividends consistently for 10 – 24 years fall into the category of dividend contenders

Champions: Dividend champions are stocks that have raised dividends for more than 25 years consistently

The Aristocrats: The same criterion as Dividend Champions applies. In addition, stocks must be listed on the S&P500 in order to be called a Dividend Aristocrat.

Dividend Kings: Finally, these are companies that have raised dividends for 50 straight years.

However, do not let the past performance fool you into complacency. A good example is that of GE. In 2009, the financial crisis led to GE slashing dividends for the first time since 1938. This came as the company continued to raise dividends consistently for 32 years.

GE Dividend Yield chart

GE Dividend Yield chart

What is the dividend payout ratio?

Investors make use of different financial ratios and metrics in order to assess potential stocks for their portfolios. Among the many financial ratios available, the dividend payout ratio or DPR for short is useful when analyzing dividends.

The DPR helps to analyze the dollar amount of the dividend that a company pays in relation to the net income.

In simple terms, the dividend payout ratio shows the percentage of earnings a company paid to its investors and shareholders. Any money that is not paid out to its investors or shareholders are reinvested into the firm’s operations.

It is important to note some distinctions here. Although the dividend payout ratio offers some insight it does now provide for shareholder value. The DPR should not be used as a means to evaluate a company’s viability.

The dividend payout ratio is used when considering if you want to invest in a profitable company paying dividends versus a company with high growth potential.

You could also see this as a way to compare a steady income or reinvestment for possible future earnings.

The Dividend Payout Ratio Calculation

The DPR offers investors a way to see how much money a company puts back into growth, its cash reserves and for financing the debts. It compares these values against the amount of money that is given to the shareholders and investors as dividends.

Also known as net income, this figure can be taken directly from a company’s income statement.

The formula for calculating the dividend payout ratio is simple. You divide the yearly dividend paid by the net income.

Dividend payout ratio = Dividends/Net income

Alternately, you can also calculate the dividend payout ratio by dividing the dividends per share by the earnings per share.

Dividends Per Share / EPS

If we take an example, say a company ABC Inc. paid $1 per share in annual dividends. The earnings per share was $3. Then the dividend payout ratio would be 1/3 or 0.33 or 33 percent.

Interpreting the dividend payout ratio

Interpreting the dividend payout ratio is relative. For example, if a company as a DPR of 35%, this begs the question of whether this is a good or a bad payout. The answer to this can vary depending on how you look at it.

Typically, growing companies tend to retain most of their profits to fund growth. This eventually offers the prospects of the investor getting a more favorable dividend at a future period of time. But this comes at the cost of the investor not receiving any dividend for the moment.

On the other hand, a mature company tends to offer higher dividends. This is because there is little room for growth.

The profits are therefore diverted as dividends to make the stock look more attractive. In most cases, stocks in the utility sector fell in this category. But the trend has started to change in recent times.

Other information about a company’s strength can be derived from the DPR.

Companies pay dividends due to motivation and at levels that they think can be sustainable. Therefore, companies do not pay aggressive dividend amounts merely to please its shareholders.

When a company pays dividends at unsustainable levels, it will sooner than later have to cut back on the dividends. This can lead to a loss in share price and reflect poorly on the company’s management team.

One can also analyze the dividend payment trends over time. This can tell you if the company is able to maintain its profits and thus sustain paying the dividends.

In summary, the dividend payout ratio should be used in a context of the company and the industry it is is. The DPR can also be used to compare competitors.

How to find high dividend growth stocks?

The first place to start when looking for high dividend growth stocks is, of course, taking a look at stocks that are paying out dividends.

Start by looking at the payout ratio. A payout ratio of 30% – 50% is a good start. You can find a number of stocks under these criteria. Fundamentally, this also means that a company has ample cash left to fund its other objectives.

Secondly, looking at the balance sheet also helps. For dividend growth stocks, you should look at the credit ratings for the company as well. The strength of the balance sheet can vary over time. Companies that have large cash balance can afford to pay dividends for a while even during market turns.

A company with good investment grade ratings can have easy access to funding at lower rates. This greatly increases their ability to borrow money to bridge a gap in short-term cash flows.

Next, looking at a company’s market share and the industry growth forecasts can also help. There are two factors that enable a company to grow its dividends. A company can raise its payout ratio.

Alternately, a company can choose to increase its growth earnings.

Picking high growth dividend stocks is an art and there is a bit of subjectivity involved. Let’s take a look at a case study to understand how to pick high growth dividend stocks.

Case Study  – Lowes dividend growth

Home improvement giant, Lowes (LOWE) is a company that has an impressive dividend history. The company has been paying dividends since 1961 when it went public. Lowes is also a Dividend King because the company has been raising dividends for 54 consecutive years.

The consistent increase in dividend growth put Lowes to outperform the S&P500 index consistently over time. In the last ten years, the company gave a total return of 315%. This is a huge number when compared to the S&P500 index’s total return of just 135%.

Lowes (LOWE) Dividend Yield

Lowes (LOWE) Dividend Yield

The dividend growth was successfully met by the company as it ticked all the checks. In the past five years, Lowes has also increased its earnings per share at an annualized basis of 21%.

While most dividend companies are expected to be mature businesses, Lowes managed to continue expanding by opening new stores. The company generates $19.2 billion in free cash flow. This enables it to raise dividends as a result.

Data from 2017 shows that Lowes generated $5.1 billion in operating cash flow. Of this amount, $1.1 billion was reinvested in capital projects. This left the company with free cash flow of $3.9 billion.

In terms of ratio, Lowes currently pays less than 35% of its earnings in dividends. As a result, the dividend yield is just slightly above the average of 1.9% from the S&P500.

Excess cash flow – An indicator

While this might be low, bear in mind that the excess cash flow could lead to an increase in future dividend payouts. It also allows the company to expand its business or even to invest in shares buyback.

During 2017, Lowes bought back $3.1 billion in stock. In early January, the company announced a $5 billion share repurchase program. It is expected to repurchase a further $10 billion in shares by end of 2019.

The balance sheet of the company also has an A rating and backed with a leverage ratio within its target.

When investors look at a company such as this you can consider the cash on balance sheet. At $558 million, it is certainly not adequate to fund a year’s worth of dividends. But when you account for the cash flow and low payout ratio alongside a high credit rating, there are adequate buffers in place.

In terms of growth, Lowes has further room to grow further. According to reports, the company will be opening 10 new stores and to bring its total count to more than 2,400 locations. This, in turn, is seen to increase sales by 4%.

High dividend growth stocks – In summary

In summary, the high dividend growth stocks are known to generate a mountain of free cash flow every year. This allows them the liberty to let the money either grow their business or to pay dividends.

When looking for high dividend growth stocks, look for a dividend payout ratio between 35% – 50%. After this, the company should have spare cash flow as well so it can reinvest it back into the business.

When a company has a balanced allocation, it helps to grow earnings at an average of 10% annually. It allows for the dividend growth to rise at the same time based on the industry.

Also, note that a company should have strong buffers to provide for the necessary margins. It enables a company to grow its dividends while also being able to reinvest in more challenging times.

To be successful with investing in high growth dividend stocks, it takes due diligence. Each company and industry is different. Therefore, investors need to be very careful and allow for some flexibility.

One of the best places to start is by looking at the dividend categories mentioned earlier. You can either look at the dividend challengers or the dividend kings, both sides of the spectrum.


Al Hill is one of the co-founders of Tradingsim. He has over 18 years of day trading experience in both the U.S. and Nikkei markets. On a daily basis Al applies his deep skills in systems integration and design strategy to develop features to help retail traders become profitable. When Al is not working on Tradingsim, he can be found spending time with family and friends.

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Day Trading Like a Business – Learn What it Takes

https://tradingsim.com/blog/day-trading-like-a-business/

Nothing is given. Everything is earned. You work for what you have.

Traders who are most successful in day trading are those that can draw similarities between their day trading operation and a traditional business. While day trading may be polar opposites from a brick-and-mortar company, similar business principles will decide who has lasting power.

In this post, we will cover some of the basic questions many new traders have when considering day trading as a career. To be clear these are traders looking to go at this on their own either fully funded or with a prop firm.

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Starting a Day Trading Business

Business Plan

Trading Plan

Starting a day trading business requires a few basic elements: trading capital, knowledge, trading equipment, measuring performance and how to pay yourself a salary. Let’s analyze each piece of the puzzle.

1. Trading Capital

Starting a day trading business without trading capital is impossible. SEC regulations require that day traders operating in the United States must have at least $25,000 in their trading account to be able to make quick trades commonly associated with day trading.

While you may get away with exceeding the limit for a few days, your operation will be quickly shut down until enough capital is obtained.

However, keep in mind that starting a day trading business most often requires more than the legal minimum investment.

Consider this: to make $75,000 a year on a $25,000 account, you would have to generate an effective 300% annual rate of return. These sorts of return will require you to take on enormous levels of risk. This level of risk taking is often what leads to traders blowing up their account.

2. Knowledge and a Day Trading Business Plan

Starting a day trading business also requires a firm understanding of the financial markets, as well as a solid business plan – a.k.a your trading plan. It should outline how much you’ll stake on each position, how you’ll cut your losses, how you’ll define winners, and how you’ll evaluate each trade.

The goal of the trading plan is to anticipate every outcome while reducing the risk that your emotions and “gut feelings” will get in the way of making money. Just as successful companies thrive on people, process and product you need to ensure your process for trading is ironclad.

No matter your level of experience, if you begin to trade “freely” you will ultimately fall victim to the market.

3. Trading Equipment

Trading Monitors

Trading Monitors

Starting a day trading business has a number of front-end costs to consider that should be marked in your day trading business plan. The first expenditure is a trading machine and software.

Most day traders have a minimum of two monitors to watch streaming data, charts, and brokerage software. Other day traders have entire walls of monitors that track every type of imaginable tick and chart type.

Also, you should invest heavily in a reliable internet connection – and a backup connection. An unreliable internet connection will result in losing trades and less control. Remember, you may have at any time hundreds of thousands of dollars in the market, and without an internet connection, you won’t be able to enter and exit your positions. Going cheap here could cost thousands in the long run.

4. Measuring Performance

You will need to measure your performance, first for yourself to keep track of your progress but ultimately as a means to attract investors.

At the end of the day, if you don’t have the numbers, you don’t have a business. Now, the numbers are relative. What I mean by that is if you are looking to attract aggressive investors or make a name for yourself quickly, your returns will need to come fast and in a hurry.

If you are more measured in your expectations,  then time will play into your performance and you can focus on showing a positive return over a 5 or 10-year period.

Measure Performance

Measure Performance

I have written extensively on how to measure your performance which goes really deep on this topic.

While these stats are super important and will help you gauge your performance, the one big metric I focus on like a hawk is my profit/loss for the week.

As you are trading like a business and not a hobby, your goal is to make profits.

I like to break my week down into three parts (1) get ahead, (2) stabilize and grow and (3) protect.

This is how I start each week in terms of my mindset. Now that is, of course, subject to change based on how things are going.

Monday and Tuesday are really about getting ahead. I don’t necessarily take more risks, because I try to always maintain control. However, I might not be as strict about the trades I take and I will let my profits run a little longer.

Wednesday and Thursday are building blocks to add onto the success from earlier in the week. This is also a time for me to make sure I build upon the earlier success in the week and not making any sloppy trades.

Friday is about protecting and not taking on too much risk. This is because you do not want to blow up your entire week based on one bad day.

I recently had a Friday like that where I literally gave back an entire week in 2 hours. Let me be the first to tell you this does not feel good and can really screw up your mentals heading into the weekend.

So for Fridays, if I’m up big for the week, I may limit the number of trades I place or limit the amount of money I use on each setup. This way I dramatically lower the risk of blowing up my week.

5. Stringing Together Winning Weeks

Winning Streak

Winning Streak

Now that you are building up to your winning Friday the next thing you want to do is string together a number of winning weeks. This will allow you to continually push your account value up and to the right.

In the beginning, do not concern yourself with how much you are making. The only point of importance is that you are not blowing up your account or demonstrating any of the self-destructive behaviors that hold you back from trading success.

Once you start to put together a winning streak, momentum starts to move in your favor. You will start to take on a winning attitude and this game I believe is 80% mental and 20% strategy and technicals.

6. Winning Months

Now, this is the big metric I track and there is no wiggle room on this one. I have to finish up for the month. Let me restate this – I have to finish up for the month.

I will set a potential profit target but I historically aim too high. So the one big metric I focus on is finishing in the black.

You cannot control how much you will make in the market. There are so many factors that drive your potential profits but the one thing you can control is your own actions and refusing to finish in the red.

7. This Does Not Mean Trying to Force Your Will on the Market

Please do not misinterpret my point to say you should do whatever it takes to make the market provide you with money each month. What I am saying is if you are focusing on your daily outcomes. Then you have a game plan for managing your money for the week. Next, you build up these winning weeks to a full month.

If you follow this approach, the odds of you finishing in the red are slim to none. It’s not about forcing trades or trying to force the market your way (which is impossible).

It’s about doing the right things on a daily basis which ultimately over a twenty to twenty-two day period build up to you turning a positive return.

8. Paying Yourself

Pay Yourself

Pay Yourself

Never Take a Dime Out – Grow..Grow..Grow

This is where I feel many people on the web mislead traders in terms of the value of money. You hear about traders taking a small amount of money and growing it into some massive fortune.

While this makes for great commentary on the web, do any of us honestly believe this is a common occurrence?

Also, when do these traders pay themselves? How do they structure their lives in terms of paying bills, saving for retirements and family vacations?

These are all answers you need to account for if you plan on taking up day trading as a business.

Now, your first inclination is going to be to grow your account to some mythical number before taking profits. This, my friend, breeds poor habits over the long haul.

To place real value in the money, you need to take money out and use it in your everyday life. This will not only teach you the value of your hard work but will also allow your family members who sacrifice spending time with you to also see benefits of having to put up with your occasional mood swings.

9. How Much Do You Take Out?

This is going to be completely up to you. The minimum you will need to take out is your monthly commitments.

Once we get beyond this figure, what is another realistic number?

Set a Fixed Number

I like to set a monthly target for myself in terms of payout. Once I hit that number I immediately withdraw the funds from the account. The rest of the month can then be used to increase my account value.

50% Payout

You can also use an approach where you take 50 percent of your profit out. The challenge here is that you will have a tough time growing your account after paying taxes.

In Summary

Starting a day trading business is rewarding and profitable. Whether you’re looking for flexible hours, a work from home environment, or a career with unlimited profit potential, a day trading business is a great way to start a side business.

I have laid out here the key aspects of what you need to consider before picking up trading as a profession. At the end of the day, you must turn a profit in order to consider yourself in the trading business.

Learn how to build your trading day, week and month by replaying the markets in Tradingsim. I have personally been able to trade months in only 5 days.

This way you can see what it takes and tweak your strategy in order to turn a profit.

 


Al Hill is one of the co-founders of Tradingsim. He has over 18 years of day trading experience in both the U.S. and Nikkei markets. On a daily basis Al applies his deep skills in systems integration and design strategy to develop features to help retail traders become profitable. When Al is not working on Tradingsim, he can be found spending time with family and friends.

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Learn How to Overcome Fear When Trading

https://tradingsim.com/blog/stock-trading-emotions/

Confront

Are you currently trading and dealing with fear and anxiety? Don’t feel bad, you aren’t the only one.

Trading has a way of wearing you down if you don’t get a handle on the mental side of the game.

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As you read this post, it is going to feel like I’m bouncing around from topic to topic. This is ok. Stay with it as we explore the fear emotion and how you can recognize it and ultimately go beyond what’s holding you back.

Emotions in Trading

Emotions have no place in a day trader, swing trader, or even long-term trader’s outlook.

When we try and protect ourselves from fear, we end up resorting back to our habitual instincts to enter into a place of comfort, whether or not that place is a reality. We stop taking responsibility for our own fears and start blaming others for our problems.

In the end, we try and find an easy way out by searching for magic indicators, or Holy Grail solutions.

When I think back on my day trading career, I remember the times where I continuously changed my trading techniques to achieve the result that I was looking for. No matter what technical indicator or stock trading system I used, I would yield the same result, losses. It didn’t matter what I did, I had to fix the real problem which was in my psyche.

I was trapped by the life principles that governed my life since I was a child in that I needed to be a perfectionist and was a sore loser.

I was the guy always looking to ace every exam in school. My stock trading reflected this as well; I refused to take a loss quickly due to my overriding obsession with being right on every single trade.

I didn’t believe in myself; everyone else said the stock market was random, or gambling as many would put it. I would act as if this did not affect me but it did subconsciously and I carried that line of thought into my stock trading.

I was heavily trained in mathematics throughout my academic years and considered myself to be very analytical. Stock trading is an extremely fast game and requires lightning-fast decision-making skills; you don’t have very much time for analysis. Having these traits is not good or bad but it is not conducive to consistent trading profits.

The Stress Effect

Stress When Trading

Stress When Trading

Stock trading brings its fair share of stress, as you all know. The question revolves around how you handle the stress.

Some get physically sick, some start to panic, and some even go into depression due to the violent swings that the stock market can produce. Depending on the situation and the person, the stress reaction may be minor or very severe. Your bodies response to stress is physically and emotionally exhausting.

As you continue to experience stressful situations, the more accustomed you become to the idea of the negative feelings that are associated with stress. These negative feelings turn conviction into doubt and nervousness. Practice yoga, meditate, play sports, exercise, spend time with your loved ones, work on your spiritual growth. You need to de-stress your mind and clear your mind. Obsessing over your trades will do nothing but burn you out and leave you on edge all the time. There is more to life than trading stocks. Don’t let trading get you too emotionally high or low. The key to lowering stress levels is to be grounded and also to be confident that you can make the right decision when the time comes. That comes with experience so be patient.

Anger Management

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Anger is another emotional response that has no place in a stock trader’s heart. Figure out what is troubling you inside and learn how to deal with it immediately before it manifests inside as pent-up anger which will show its ugly head sooner rather than later.

Anger makes you vengeful and provokes bad decision making in the hopes of “getting back” at the market or forcing trades due to the frustration of losing. I can’t tell you how many times this had happened to me when I was a junior trader and I never saw anything but losses stemming from it. Verbalizing and expressing your anger in the appropriate ways will allow you to drop the proverbial “baggage”. You will sense a feeling of freedom internally from not having to cover up your past emotional experiences which have kept depression, panic, and anxiety alive.

Remember, the more you can disassociate yourself from your emotions, the better at stock trading you will become.

Conquering Emotional Swings

You will face strong resistance internally from yourself when you take your first step to create a larger vision for your stock trading. This means you will need to let go of your bad habits and take a leap of faith and do what is required to reach your goals. I have seen many traders who psyche themselves up and temporarily follow their stock trading vision. The problem arises when trader’s experience the emotions of losing; many tend to lower their expectations and go back into their shell, going back to what they are used to. They start reverting to old habits and going back to square one again.

Some trader’s try psyching themselves up by screaming, shouting, speaking positive thoughts, working more, etc. Sure you need to be positive, but by solely taking these steps, you are subconsciously reinforcing the idea that you are deficient in some aspect of trading that is preventing you from reaching that true level of mastery. They mask the underlying issues that you need to face up front and center.

Refining Your System

Any time you make changes, you will face internal resistance from within, fear, fatigue, insecurity, and even opposition from family members or loved ones. You will most likely even receive negative energy from those around you who are threatened by what you are doing. Change does not happen overnight and you have to stick with your convictions in the face of self-doubt; be patient and allow yourself time to achieve the goals that you set out to reach. Don’t allow yourself to become a victim of these negative thoughts. They will only serve to distract you from concentrating on what needs to be done. Again, we want to attack the root of the problem which is how you interpret these feelings. You will not necessarily be able to rid yourself of them; however, you can stop focusing on them. Focus on the future and on what you want out of it. It is key that you change your thought process when it comes to negativity.

To manage your risk and emotions, you have to accept the negative feelings that you internally attempt to suppress. Rather than ignoring them, face them and associate no significance or meaning to these feelings.

Eventually, we will become what we resist similar to the way we say that we will never become like our parents. Most of us do. Therefore, by showing no importance or resistance to your negative feelings; you allow yourself to focus on your positive goals.

Identify How Your Past is Impacting Your Future

You can ask yourself a few questions to understand how much your past affects your thinking. Figure out what the opinions of others mean to you:

  • Do you heavily rely on others?
  • Are you hesitant to speak up in front of others due to fear of sounding “stupid”?
  • Do you look to others for approval before you commit to action?
  • Are constantly speaking about past accomplishments?
  • Do you need input from others in your decision-making process?

For those of you who answer “yes” to many of these questions, you are fearful to act or commit to a plan of action without external approval. Consider how this affects your stock trading activities; you will quickly realize how fear prevents you from becoming the trader that you know you are or can be. Be honest with yourself and you will then move forward.

My Personal Journey of Conquering My Fears

Journey

Journey

When I thought of fear in the market, I thought this meant me running away from volatile stocks. I had this belief that I needed to be like every other trader out there and only trade penny stocks that move wildly first thing in the morning.

Well going back to who I am as a person, I an anything but wild. I lead a conservative life and am a private person. So, why was I focused on stocks that trade unlike I live?

I spent four long years trading these highly volatile stocks with some success but never the explosiveness I knew was within me.

I just kept banging my head against the wall in the spirit of not being afraid.

In Reality, My Fear Was Recognizing  My Strengths

It took many years of trading both the US markets and Nikkei before it finally hit me. The penny stocks are not for me.

I remember when I first started trading low volatility stocks it felt like I was giving up on years of research. Years of hard work just thrown out the window.

I had to let go of everything I heard on the web and read in trading courses. At first, it felt like giving up but within the first week, I saw immediate results.

It’s like all of my techniques and strategies were on steroids. Was it that my systems somehow magically started working overnight? Or could it be the market was more conducive to my trading style?

Neither, it was that I finally put my baggage behind me and accepted I am not some wild cowboy. Letting go of this need to trade like others truly released me from my own mental jail cell and endless analysis.

Now, this doesn’t mean I don’t at times refine my techniques, but I now know who I am. Having this level of clarity ensures I stick to what works for me.

How to Confront Your Own Fears

Confront

Confront

Below is a method you can use to identify, confront and resolve the fear you are facing as a trader. You can also use this technique to combat other emotions such as greed.

  1. Write down what you are afraid of. Don’t worry about making it perfect or using perfect grammar. Just get it all on paper. This should be completely free form with no concerns about judging yourself or how you will sound.
  2. Define the source of your problem. Now your first inclination will be to think from the prism of the market. This exercise will require you to think in more broader terms. For example, I had to confront the fact I live a pretty tame, private life before realizing low float stocks do not match my personality. So, what is the root cause of your problem? Have you always had money troubles? Are you bored in your personal life and just looking for an escape?
  3. Next, think about ways you can solve for these emotions you are facing. Again, your first inclination will be to refine your current strategy, but a lasting solution may require you to unravel your perceptions of the market and how you should be trading. For me, it was abandoning trading low float stocks. What is it for you?
  4. The next part of the process will require you to test and learn your new approach. For me, while I targeted lower volatility stocks, I needed to find the right mix. Meaning too low and the returns were not worth the time. For you, you will need to test this unchartered territory to refine your hypothesis. This process is not a race but more about breaking bad habits and accepting your new norm.

In Summary

To get to the next level in your trading journey, it may require you to take major steps. These steps could require you to let go of old beliefs or a trading guru who’s methods do not match your trading style.

But believe that with enough effort and willingness to change, you can confront fear and overcome the situation. This will allow you to move forward and into the bigger and better version of yourself.


Al Hill is one of the co-founders of Tradingsim. He has over 18 years of day trading experience in both the U.S. and Nikkei markets. On a daily basis Al applies his deep skills in systems integration and design strategy to develop features to help retail traders become profitable. When Al is not working on Tradingsim, he can be found spending time with family and friends.

POPULAR LESSONS IN THE COURSE: Mental Toughness

Friday File: 5G Time!

https://www.stockgumshoe.com/2018/10/friday-file-5g-time/

The next wireless standard to be adopted by telecom service providers might be the biggest one since 3G enabled the first real “high speed” data and reasonably useful internet access by smart phones.

And new wireless standards are always of interest to investors, not least because the growth of smartphones has tracked the improving networks — the first iPhone was released with older 2G/EDGE network technology in 2007, but the faster 3G network made the first iPhone upgrade a year later, the iPhone 3G, truly revolutionary as it went beyond “novelty” status and added GPS mapping and push email and the App Store and other features… and the last two big jumps in unit volume for iPhones were in 2012, when they introduced their first 4G phone (LTE connections and much faster data that made mobile video possible… that’s still the current standard), and in 2015 when they released their first bigger screen phone and made a huge splash in the China market.

And I’m starting to think that 5G, the next standard that will feature data speeds perhaps 100X faster than the current mobile internet, is being under-appreciated by the markets… though that could be starting to change, and I added to my “5G portfolio” this week.

Let’s start with the news: Ericsson (ERIC) reported yesterday and provided some more real optimism for 5G enthusiasts… Nokia (NOK), their major non-Chinese competitor for equipment that will be needed in the rollout of 5G networks, will report late next week. There’s no magic here, but both of these companies have been positioning themselves to be core equipment suppliers as 5G networks are built out by telecom companies, and it looks like their plan is finally starting to work.

There is the near-certainty of rising investment by telecom companies in 5G networks over the next couple years, with AT&T, Verizon and T-Mobile/Sprint all installing equipment in their first test markets, and Ericsson appears well positioned — they and Nokia have both had a rough couple years as telecom infrastructure investment has been soft because of the maturity of 4G/LTE networks that has kept equipment orders down, but their investment in new technologies and cost cutting seem to have helped bring gross margins up and make them profitable again.

Ericsson’s share price is up something like 40% this year, so some of that recovery is already …

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