Comparing Yourself to Other TradersMarket & Sector Review
This Week's Economic Reports
Comparing Yourself to Other Traders
You have been trading for about six months (or just a year or two). Perhaps your performance isn't spectacular, but it isn't too bad either. You've made a decent return. Are you satisfied? Or have you been reading "Market Wizards" and reading posts on trading websites, and you can't understand why your performance isn't better. "Why are my profits so small compared to everyone else? I must really be a loser," you think. You have just made an understandable, but fundamental mistake. You have compared yourself to other traders, noted that you aren't doing as well, and have concluded that you are inadequate. Although comparing ourselves to others can help motivate us to do better, it can also very often be so discouraging that it tends to be more detrimental than beneficial. It is advised to avoid making such comparisons.
Why do we compare ourselves to others? There are a variety of possible reasons. It could be because our parents or teachers taught us that we should do better than our peers, and gauging the relative performance of others is the best way to do that. It could be that many times, we don't know what "good" performance is and it makes sense to see how others are doing so as to get an accurate picture of what is acceptable. It makes sense to wonder about other trader's performance. Since most novice traders quit within a year, many are curious as to whether it is even possible to achieve profitability. (It is possible, but it is extremely important to understand the conditions under which consistent profitability occurs). If you are "new" you should know that some traders are able to maintain a consistent level of profitability after years of hard work and skill building. Knowing that trading consistently is feasible will motivate you. If you know that it is possible to make a profit, you'll work hard because you know that there is a certain payoff in the end. Often, however, comparing ourselves to others can do more harm than good.
Each trader has his or her own personal history or circumstances that he or she brings into trading. People differ in terms of personality, investment capital, life experiences, and the market conditions under which they trade. Any or all of these factors can influence one's trading performance. It makes no sense beat yourself up because you haven't achieved a level of performance equal to someone else who may have had advantages that you didn't have. The only person you can compare yourself to is you. If you make any comparisons at all, it should be against your own past performance, not someone else's. In addition, you should only examine your past performance in relation to similar market conditions. If you made a 30% profit in the up trending market of the past year, for example, you shouldn't berate yourself for performing less well in the markets of recent months.
Successful people in all fields avoid making comparisons to others. In the end, the only person's opinion that matters is your own. If you believe you are doing well, then that is all that matters. So when you find yourself comparing yourself to others, stop. Look inward. It is just you, the markets, and no one else. The more you can focus on your own standards, the more profitable you'll be.Market & Sector Review Lowry's Reports is the oldest continuously published Technical Investment Advisory in the United States. I have followed (on and off) some of their studies for a quite a number of years. As of last week their Buying Power Index and their Selling Pressure Index were showing that the Buying Power Index (demand) was dominating the Selling Pressure Index (supply), and has been since March. As a general rule, based on their historical studies, when the market is topping there is a period of usually a few months when the Selling Pressure rises. That means the supply is rising. That is not happening at the moment, Selling Pressure has been trending lower while Buying Power has been rising. This suggests the market wants to go higher, it may be the last hurrah, but these studies are implying higher prices ahead. This is in no way a short-term timing indicator but is often a good leading indicator of the future intermediate term trend.
In the short term however, I suspect we have made or are very close to a minor top. After the close on Friday, the futures markets (on stock indices) sold off quite a bit. MDY the ETF representing the S&P Mid-caps reversed on substantial volume after making nominal new highs, the McClellan Oscillators are diverging into these new highs and the rally has been on uninspiring volume. I hope everyone playing the long side is playing it close to the vest and moving their stops up with there stocks.
When following the different reports and the new report in last weeks newsletter you will find in time how sometimes things just pop out and say "look at me". In mid-May when introducing the new trading reports, I pointed to a new indicator labeled RTN, for ETF's, sectors and groups that have traveled too far from their respective 200-day moving average and indicated that often these levels lead to a reversal back towards that moving average. While the indicator is intended generally for short-term traders only, I am finding it can also give early indications for a reversal of the trend for intermediate term traders as well, in other words "look at me". If the sector or group mentioned is of interest to you, begin to put it on your radar screen. In the May 21 letter when introducing this indicator I stated "Note of interest for you gold bugs, gold, silver, and aluminum groups appear on the RTN list as buys".
Last week I introduced a new scan which will eventually be a daily scan or somehow incorporated into the reports that showed the most improved as well as the largest declines in two measures, relative strength and the PT-PPO for ETFs and groups, and low and behold Silver showed up as the second most improved group and it was noted could this be a precursor for the precious metal stocks in general? In this weeks report (see below) Silver is at the top in the most improved measure (PT-PPO) and has also moved up in relative strength (this week the 5th most improved) only beat out by energy. Now joining Silver in the most improved is Gold.
This week let's take a look at the precious metals. Before we look at the charts I'd like to point out two interesting things: 1) all over the financial news this week were stories about the lack of inflation, inflation is no problem and 2) Gold was supposed to be trading higher because of the decline in the dollar, in other words Gold was only advancing in dollar terms, not against let's say the Euro. Well if inflation is no problem then why are commodities again rallying? And if Gold is only supposed to rally when the dollar declines, then why is Gold, advancing along with the dollar? A disconnect appears to be in the works, why? I currently don't know, perhaps inflation is a coming problem.
Let's now take a look at one Gold Mining Stock (hint, search Group 135, in the members area, there are stronger relative strength gold miners, this is probably the best known) Newmont Mining.
In addition to the mining stocks we now have an Exchange Traded Fund (GLD) which holds Gold bullion so it will trade directly with the price of Gold and may be a better buy if the gold mining stocks get too far ahead of the price of gold.
Again, I would not chase this group, I fully expect a pullback to occur shortly and on that pullback is when you may want to start accumulating these shares with a reduced risk exposure. Start with perhaps a 25% commitiment then add to if we are proven correct by a return to new highs for this move. Last week I re-printed a reuters article about the Gold outlook from Newmont Mining, you may want to re-read that by Clicking Here! at the bottom of the letter.
If you spend just a little time reviewing the various reports you will be amazed over time how on occassion ideas such as this pop out and develop over a few weeks time, or cause you to act even sooner than I get a chance to point things out.
This Week's Economic Reports
Have A Great Week!BillDisclaimer:Trading in securities, of any type, may not be suitable for all individuals. The contents of this newsletter are not a solicitation to buy or sell securities. The opinions expressed are solely that of the author. You must do your own research, contact your own financial advisor for suitability of any investments. Data gathered is from sources believed to be reliable, but NO guarantee as to their accuracy is made.
This week let's take a look at the precious metals. Before we look at the charts I'd like to point out two interesting things: 1) all over the financial news this week were stories about the lack of inflation, inflation is no problem and 2) Gold was supposed to be trading higher because of the decline in the dollar, in other words Gold was only advancing in dollar terms, not against let's say the Euro. Well if inflation is no problem then why are commodities again rallying? And if Gold is only supposed to rally when the dollar declines, then why is Gold, advancing along with the dollar? A disconnect appears to be in the works, why? I currently don't know, perhaps inflation is a coming problem.
Let's now take a look at one Gold Mining Stock (hint, search Group 135, in the members area, there are stronger relative strength gold miners, this is probably the best known) Newmont Mining.
In addition to the mining stocks we now have an Exchange Traded Fund (GLD) which holds Gold bullion so it will trade directly with the price of Gold and may be a better buy if the gold mining stocks get too far ahead of the price of gold.
Again, I would not chase this group, I fully expect a pullback to occur shortly and on that pullback is when you may want to start accumulating these shares with a reduced risk exposure. Start with perhaps a 25% commitiment then add to if we are proven correct by a return to new highs for this move. Last week I re-printed a reuters article about the Gold outlook from Newmont Mining, you may want to re-read that by