Daily Archives: December 28, 2009

Give Me Something to Believe In! (by Goatmug)

By -

I've documented the history of actions that caused our crisis and outlined the steps our government has taken to "bail us out".  You may find the most recent post at Goatmug's Blog where we discuss The Best Cup of Coffee Ever and how it seemed wonderful and solved all of my problems, yet ended up bitter and disappointing.  As I've mentioned, I believe many of the steps taken have either not worked at all, created other problems, or simply hidden the problems.

Let's take a few of the items I pointed to in the last post and review the impact and results of their actions

A) The Federal Reserve and Treasury along with other world central banks stepped in and offered their fiscal support and immediately lowered rates again to near zero. Remember, these are front month rates and are the interest rates the government charges banks for overnight money.

The Fed voted in recent weeks to keep rates stable at effectively zero percent interest. They voted to do so some 18 months since the beginning of the crisis and 9 months after the beginning of what we now know as one of the largest rebounds in stock market history. In spite of the rally we are still around the 10,500 level on the Dow which is where we traded in January of 2006 and well below the lofty 14,000 area of October of 2007. Am I saying that we cannot return to these areas? No, in fact if the Treasury department remains committed to devaluing the dollar, I can paint a scenario where that might be a real outcome. I doubt it seriously, but it could happen.

Timothy Geithner gave an interview last week on NPR that should put us all on notice. In his words, we will not have a retest or slowdown after this recession. Although many of his other predictions have been flat out wrong, I have a strange sense that he is committed to not letting that happen no matter what. http://www.npr.org/templates/story/story.php?storyId=121778778

Mr. Geithner is only speaking of a short term pull back that he'll help us avoid, for it is too obvious that the Fed and Treasury actions create bubbles and meltdowns and they are coming with increasing speed. I liken this to a drug addict. At first there is pleasure in the use of the substance. Next there is dependency, and then an increasing need for the larger portions of the drug in greater frequency. Think about friends, family members, and others that fit this drug addict description. It usually never has a happy ending does it? I think what we're about to experience is "tough love" provided by our investors. Our friends, (Chinese, British, folks in the Middle East), are about to hold a frightening intervention with the addict and therefore we will be told that we need to shape up and cut out our drug abuse. Unfortunately, I don't think the addict will listen. It is too tempting to let all of that debt go to waste and too hard to cut spending and cut promises and entitlements.

So what are the results of these actions?

Interest rates are still low and creating asset bubbles. – Banks and other bank holding companies…er investment banks and insurance companies can now borrow at zero overnight and buy stocks, bonds, and commodities. Is there any wonder why all markets are screaming? What happens when that money is taken back? Remember, this money was intended to buttress balance sheets and also intended to be lent out to companies and consumers, not find their way to the casino!

Banks receive this money and will lend. – NOPE! This has not happened. This I believe is one of the greatest lies that has been made in this crisis. Why would any smart banker lend in the teeth of a nasty, jobless recession? Would you? If you looked at a firm that is asking for credit and he tells you that their business is slowing and they need a loan to make payroll, do you think they are a good risk? Asking bankers to lose money on bad loans is not a solution to the crisis. On a positive note, I am hearing some of my clients being contacted by banks that are desiring to lend on decent terms now. This may be an indication of some thawing.

B) The Fed also bought toxic securities outright from troubled financial institutions and traded those assets for treasuries. Our government offered the TARP funds to help institutions and even made outright purchases of banks and insurance companies. (AIG, Citbank, etc.) We even used these to buy and lend stakes to great car companies like GM!

We keep reading that many of the banks and insurance companies that we lent TARP money to have repaid us and we (the US taxpayer) may have actually made some money on these loans. The reality is that we may have made some money on loans that have been repaid, but we have taken a bath on the loans that will never be repaid. Making AIG a government controlled entity makes certain that more losses are headed our way. The Treasury Department and Fed's lack of negotiation with AIG's creditors should be enough to convince anyone that the well connected firms like PIMCO, Goldman Sachs, and Blackrock were feasting on the carcasses of weakened and dying financial firms. In addition, these same favored companies have become the mechanism by which the FED and Treasury actually implement their policies. These companies are providing transaction support (spreads), participating in deals, and also offering consulting services.

So what are the results of these actions?

AIG is a mess and still 85% owned by the US. Isn't it great we are in the insurance business?

GM – is still GM.

Goldman, Blackrock, and PIMCO are killing it

Remember too big to fail? – As a result of the forced marriages between JPM and Washington Mutual, BAC and Merrill Lynch, Wells Fargo and Wachovia, we now have a greater concentration of larger institutions. Seems like the US government has now created larger risk pockets and concentrated more power in less hands.

Finally, the repaid TARP money is being used like a slush fund now. The administration and Geithner said they had
"extra TARP money" that they could use! Excuse me, just because it is appropriated doesn't mean we need to use it if everything is all fixed, right?

C) In concert with these actions our government also looked to perform direct support (cynics would call it manipulation) in the mortgage market and the treasury market. By guaranteeing and supporting the FHA the US taxpayer became the lender/insurer to 80% of the post-collapse mortgage market. With the announcement of quantitative easing by the Fed we began buying our own treasuries to try to keep prices low and contain rising interest rates.

While short-term manipulation has been successful, it is just that – short term. The bond market is bigger than any one central government and the bet made by Bernanke is going to be called. Once that happens interest rates will climb (and as I type this we are seeing 30 year mortgage rates 10bps higher in one day last week!). THIS IS A HUGE MOVE BY THE WAY! Who will step in to fill the void of the government in this volume at these rates?

Stabilizing the home market is job #1 – The government has artificially lowered interest rates and become the dumping ground for all banks to offload their paper on the US taxpayer. Few banks are doing direct lending to residential borrowers without FHA backing. Home sales look to be moving up, but we must ask how long this will continue if rates jump substantially, cash for houses go away, the FED stops buying MBS (stops being the market), or banks actually release the huge backlog of foreclosures that they have kept on their books.

Don't get me wrong, the government is having an impact here and this is positive for the economy. I'm very concerned that this could change if any of the government "help" is removed or investors demand higher rates and push mortgages rates over 6%.   For example, in November we were to have the final expiration of the first time home buyer credit.  Sales were pulled forward and suddenly we have a reported drop in new home purchases in November.  The following Bloomberg article demonstrates what the threat of pulling stimulus does.  A mad rush of buyers that would have bought anyway step forward to take advantage of the taxpayer-paid windfall, and then demand dries up in the following months (Cash for Clunkers anyone?).  http://www.bloomberg.com/apps/news?pid=newsarchive&sid=al3GTnIut0Ao

Obviously I'll have this prediction in my top predictions for 2010, but I'll suggest here and now that we have a dip in the sales trend in existing homes as much of the inventory that has been clearing has been foreclosures and investors (not occupants) have been swooping in to pick them up.  Hopefully those investors have been buying smart and have deep pockets because I will predict that we'll see the new generation of home flippers that have emerged get sunk in 2010.  They'll find that there won't be many buyers for these homes when mortgage rates hit 6% or 7% since we're all spoiled and believe that 4.75% is what we should expect!  These investors will also get hit hard when banks like Wells Fargo and Bank of America actually release their piles of inventory instead of letting them trickle out.  Look for these inventory clearances after 1st quarter reports come out.

We were told that housing is the key to recovery – housing has not recovered yet, so I guess there is no recovery yet.

D) The Obama administration got in the act and began programs like the Housing Tax rebate for first time home buyers, Cash for Clunkers, and now Cash for Caulkers. In addition, the federal government has continued its payment of extended unemployment benefits. In addition, as a country we are now running a huge fiscal deficit (nothing new, just the magnitude of it is) and our government's expansion has required us to raise the debt ceiling (allowable debt of the country) to $1.8 Trillion Dollars! This doesn't even account for the addition of any new health care program or new stimulus.

As I've mentioned several times, I believe that the Fed and Treasury must be cussing the administration for their interference. The Obama administration has kept to their strategy that they wouldn't waste any crisis and by goodness they haven't. In the hysteria they have continued to plunder the US taxpayer and add more programs and benefits to the entitlements for anyone that will take them.

We are now seeing that COBRA subsidy benefits are being extended to the unemployed (they have been offered for 9 months) and will be provided for another 6 month period. The program pays 65% of the premiums that someone that has been laid off of work must pay to keep their health insurance. It seems odd to me that the US Government and US taxpayer would pay for health plans at rates that are significantly higher than what can be obtained by families in the open market with individual policies. Of course we shouldn't be amazed at all about this, this is what happens when government makes decisions. This one example illustrates how the new health reform plan cannot and will not be an improvement or a cost savings for anyone.

While Obama has added his pork to the budget, the US treasury buyers will not tolerate the bloated debt of the USA. The market will require higher rates of interest and this will cause significant pain for all of us.

Crisis Management– Administrations have added pork laden projects and plans to the backs of taxpayers as an excuse to stimulate the economy. There are no plan for fiscal restraint or management of the budget. What simply blows me away is that I hear Obama speak about finding waste in government programs to pay for more stuff! Where is the idea that you cut costs and if necessary, benefits?

I'll comment more about the health care reform bill in another post, but you need to understand that the winner here is the health insurance industry (for now).  As these bills are written they will have a captive audience of buyers.  Many of you know that I own a health insurance brokerage and I saw a huge swing in commentary by insurance companies.  If you don't think they are giddy, you are WRONG!  Check out this email link I received from Aetna.  These guys were hammering the Senators and then suddenly came out with this gem.  Mind you, if this goes through I hope to sell everyone one of you a policy because I would hate to see you go to jail or pay stiff fines, but everything about this stinks and reeks of over promising and under delivering at a terrible cost to tax payers.

A key provision in the plan is the elimination of pre-existing conditions as a basis for exclusion or rating up.  Once this exclusion provision is removed we will witness the elimination of INSURANCE!  Why would you obtain insurance till you have something serious now?

GDP was revised downward and we are seeing that the government is responsible for most of the production for last quarter. I understand that

We were told we need these programs to stimulate the economy– all have been short term and have done nothing to change the fundamental situation.  We still have 10% unemployment and 17% U-6 unemployment.  We were told that everything would begin to get better once housing is stabilized, we haven't seen housing stabilize and won't for a while.  More appropriately we'll see things stabilize when people have jobs. 

E) The accounting standards board (FASB) bowed to pressure from financial institutions and our government by suddenly recommending that accounting standards be thrown out the window.

The accounting standards board have been complicit in this crime against investors as the boards were threatened and frightened into thinking that they would be responsible for imploding our economy.  Where is the leadership in our country?  I am afraid that the move to take a time out on reality simply makes it easier to do it again.  The accounting standards board should have stood up and emphatically stated that accounting standards don't change or take a time out because the truth hurts!  Future collapses will be much worse because the ponzi schemes the government and banks have set into motion were not stopped here.  Clearly now that the banks are bigger and risk more concentrated similar meltdowns will be even more destructive.

Accounting standards were thrown out resulting in a lack of understanding of true value of banks and insurance companies.  Where are we now?  We still don't know what banks are worth and they are still raising capital and still lying about the risk on their balance sheets.

F) Finally, as we saw in the previous October post called Public Enemy #1-Deflation we see that the Fed and Treasury unleashed its last desperate weapon, Dollar Devaluation. 

The dollar devaluation trade is simply a move to destroy the value of the dollar relative to other currencies.  This makes our dollars worth less and hence our debt worth less.  We could also argue that it makes our goods cheaper as we hope to sell them abroad.  The Fed has been true to its words that it would implement this strategy if faced with the prospect of deflation.  When the government went to work in March the DXY was at $89.20 and they did not disappoint.  They have moved the value down by as much at $15.00.  The DXY is now trading at 77.64, well off its lows of $74.27 in late November and early December.  So as the dollar has been pelted since March, EVERYTHING has gone up.  Think about it, stocks, bonds, bread, gas, oil, gold, and the kitchen sink have all increased.   

http://www.marketwatch.com/investing/index/DXY/charts?chartType=interactive&countryCode=us

So now, we've been told that everything is better and that we are recovering.  In fact about 3 weeks ago, we had a surprisingly strong jobless claims report that stunned the market and boom, the dollar reversed course and interest rates began to rise.  They rose because the strong jobless report indicated that things were stronger than expected and the Fed might need to remove stimulus (increase interest rates or as we know it, take the drugs away from the addict).  Since that day there has been a resurgence of the dollar.  Bernanke tried to tell the market that they would not raise rates because there were no indications of inflation in the market.  Fed governors tried to tell us there was no evidence of inflation, and now Geithner has come out and told us that there is not a chance that we'll have a double dip.  So why are rates starting to rise and the dollar increase?  How have we seen the dollar rise and the markets increase?

First we have had some credit issues with Dubai, Greece, and Spain.  All of those have reminded investors that there really is risk in the credit market and we aren't fully recovered.  Scared investors tend to go to safety, and therefore we have seen a flight to safety in the dollar.  Having said that, treasuries are a poor investment as the Fed has made sure to destroy any reality in that market (and value too).  Therefore it is easy to see how liquidity could move to other dollar denominated assets allowing for the strengthening dollar AND rising equities and bonds (at least here in the last few weeks).  The easy trade for months has been do the opposite of what the dollar does, yet in December this trend has broken down.  I believe this is an indication of the true poor health in other regions of the world and a warning shot to us that the Euro is going to suffer greatly.  As much as the US has been able to emerge from the depths, Europe hasn't.  The bond markets are signaling that something is rotten and we better be paying attention just like in mid 2007.

Remember, this move up in interest rates and increase in the value of the dollar is contrary to what the Fed and Treasury desire (even though they say they want a strong dollar for the sake of our Chinese buddies).   The increase in rates immediately translates to greater borrowing costs for the tax payers AND devalues the value of the treasury assets we already own.  The government states that it wants to keep rates low to stimulate lending, but I can also see that we need to keep rates low to keep from blowing our own foot off since we have been purchasing our own debt through quantitative easing.  Zerohedge has another good post that captures exactly what I've been saying and leading up to here. 

So we have an administration that says they want a strong dollar, but we have a Fed Chief that has stated his strategy to save the economy would rely on a devaluation of the dollar.  We have had an engineered rally in all asset classes and treasury rates that are way too low for the risk and duration of the trade.  In essence we have a bubble in Treasuries!  My isn't it obvious, where ever we see the footsteps of the Fed, we see bubbles?  So what is on the horizon for the Fed and Treasury?  In 2010 we will see greater rates as buyers decide to wait it out and purchase their mis-priced treasuries at a better risk-reward.  The greater rates will hurt bond holders and most of all the US tax payer.  The bond market at some point will change the behavior of our current administration and the corrupt politicians that look to hand out entitlements and lack the idea of being representatives of the people.

We will see drastic cuts in city and state budgets and services before we see anything on the Federal side, but cuts will come at the national level. 

If the Fed and Treasury want to keep the charade of low rates going then a fall in the equity markets will be the mechanism to deliver lower funding rates, unless they announce a new set of Q.E.

To wrap this up, we see that in each instance the failed efforts of the government to fix the situation have either simply done nothing or helped to kick the can down the road.  As we've elaborated since our first post in August, the game of extend and pretend has been in full force.  The problem is that at some point (2010, 2012, or 2015….) there will not be a way to extend it and a creditor will call our bluff and call in our debts.  What I am really longing for is for a responsible leader to stand up and say NO, we won't offer this entitlement, no- we are actually going to cut services.  Americans are going to be forced to live through these boom and bust cycles at an increasing level of speed and magnitude because our current leadership will not speak truth.  The best result of all of this crisis is that average Americans are beginning to wake up and live a paradigm based on their needs and not their wants, based on their own ability and assets, not based on what their neighbor has.  I am seeing a genuine reversion to true values of healthy financial management in peoples financial lives and in their businesses.  Unfortunately, they had better be ready quickly because our government is saddling them with more debt and taxation to pay for promises and entitlements we can't afford.

As an example of the crisis that consumers are facing check out this closing study. Almost half (46%) of 2,148 consumers surveyed recently said they weren’t confident they could come up with $2,000 within a month in a crisis–from savings, family, friends, credit cards or other sources.Even among those earning $100,000 to $149,000 a year. almost 25% doubted they could raise it, according to the survey conducted by research firm TNS with academics from Harvard Business School and Dartmouth College. 

“We wanted to know if people could fix a broken car or furnace,” says Harvard finance professor Peter Tufano, who adds that most studies he has seen measure “how much cash people have… not how much they can access.” 

The survey results surprised him. “The ability to cope with emergencies is much less strong than we might have thought.”

I saw this in reality as people in the South dealt with Hurricane Ike.  After 1 day people were cashless and without resources to make it through this terrible emergency.  Americans need to wake up and save and communicate to their leaders that it is unacceptable to continue in this fashion.  We had a final emergency and the US leadership chose to fake it till they made it rather than employ real fundamental solutions to problems of our own creation. 

At the end of the day I feel like the Bush Administration, Obama Administration, Treasury, and the Fed have just tried to spin whatever story we would fall for in order to get us to give them time.  What they have figured out is that we just want them to give us something to believe in.  Guess what, they've given us a few tales, let's hope that no one actually figures out that what we've believed in isn't worth the trust we've placed with them. 

Some New Trades

By -

Here are some new short positions I entered today, as well as their respective stop prices.

CROX    6.04

CSX    50.81

CXW    25.66

DOW    29.51

DTV    34.26

IFN    30.74

IJR    56.00

LOGI    17.54

NATI    29.87

NBR    23.81

PRU    52.63

STLD    18.64

STX    18.36

USO    39.06

I've got a longish guest post I'll put up later this afternoon. Farewell for now!

The Bond Market is Telling Us Something

By -

One thing I've learned from all the reading I've been doing this year is how the bond market figures out downturns way earlier than the equity markets. Watching bond markets as a leading indicator can be instructive, and those who have done fantastic with the ultra-bearish-on-bonds TBT lately are reveling in this reality.

Take a look at LQD, below, and ask yourself if that market seems to have turned downward or not:

1228-LQD 

At this point I'm going to say farewell for a few hours as I head off to the real slope (alpine skiing style). See you later!

Real Estate Chart Bull and Bear

By -

I've mentioned URE (the ultra-bull real estate ETF) many times recently. To my eyes, this is one of the nicest charts I've seen in a while.

1228.URE
 

However, I put more credence into what the "normal" market is doing (not the "ultra" ETFs, which offer a distorted view, by their very nature). Looking at IYR, it seems to me that, yes, there may be some more upside here (green tinted area), but the risk is starting to outweigh the potential reward. I would get anxious to take profits in real estate holdings if IYR breached into the lower 50s anytime soon.

1228-iyr  

Developing a Trader’s Mind (by Market Sniper)

By -

Hello fellow Slopers! My apologies for not being more of a regular contributor. I have recently relocated and that has thrown me a bit off my stride.

This is the first of a series of posts on setting up your trading business. The topics covered have had books written on them and this is not meant to be inclusive or, due to time and space constraints, cannot be an in-depth examination of the topics covered. They are however, what I consider to be the essentials of what is required to become a successful trader. At the end of each topic I will include further resources that I have found most helpful in my development as a trader should you wish to delve further. Here is the proposed outline:

  • Developing A Trader's Mind Set

  • The Nuts And Bolts: your business plan, mission statement and statement of belief.

  • The Search For Method

  • Finding Your Edge: trade setups, trading plans and trading journal

  • Risk Assessment And Trade Management

  • Putting It Altogether

  • These topics, with the exception of the first, are not meant to be necessarily dealt with in sequence. You will find they are highly interrelated and most, if not all, you will deal with throughout your trading career.

    Development Of The Successful Trader's Mind Set

    I am firmly convinced that this is what separates successful traders from failed traders. There are statistics and studies that indicated that 95% of all traders eventually fail. In futures trading, that 95% is usually within the first year. For equity traders, it takes a bit longer. Interestingly enough, most traders do not do the hard work in advance. They fail to recognize the psychology involved as they interact with markets. I have found that this a voyage of self discovery and one of the most difficult things I have attempted in my life. The rewards, however, are spectacular.

    Most traders read a few books, check out some web sites, open a trading account and then start trading. IF this is you, you have already doomed yourself to failure. As Dear Old Dad Used To Say: if making money was that easy, everyone would have a lot of it!

    Trading is a marathon event, hopefully one you will run for as long as you choose to continue trading. It is NOT a sprint! Most traders look for stock picks, trading gurus, sure-fire trading methods (also known as Holy Grails), etc. immediately. The Holy Grail does NOT exist outside yourself but it DOES exist! It is located between your own two ears, should you seek to develop it.

    First of all, successful traders learn to think in terms of probabilities. NOBODY knows what will happen next! Shocking, no? The good news is, you do not have to know what happens next to make money in markets. When you trade your perceived edge you are trading nothing more than your assessment of the probability of one outcome being higher than another outcome.

    It has been said that we trade our belief in what happens next, and I do agree with that statement. It is what you do when you find out what happens next that also separates successful traders from the rest.

    This brings us to dealing with the need to be right. More good news: you do not have to be always right to make money in markets! Indeed, you can be wrong a majority of the time and still make money in markets! Medical doctors undoubtedly make the worst traders. As a medical doctor you must be right. If you're wrong, people die. Bring that to the market and you will get slaughtered. In our previous successful endeavors, we have developed skill sets to become successful. Bad news: for the most part, you apply those previous skills to trading, you will get slaughtered.

    Why is that? Your previous skill set involves manipulating the situation you are in, the people around you, and your environment to achieve the desired result. The market will have none of that. Once you hit the trade button and your trade is executed, you no longer have any control over price action. Indeed, the market is structured in such a way to compel you to act contrary to your own best interest! That is the reason why most continue to buy at highs and sell at lows.

    There are a host of other issues that you must deal with as well. You might want to look closely at your relationship with money itself. Do you believe that when wealth is garnered by an individual that he deserves that wealth? Is money the root of all evil? What about wealthy people, eyes of needles and camels? There are fund managers that manage funds invested in individual traders. They KNOW when some trader is about to hit the wall due to the level of equity. Even professional traders are not immune to this. Deep down, below the conscious level, they believe they only deserve to make so much money. When that is exceeded, they find ways to give it back! Absolute equity levels are tracked by these managers. When a pattern emerges, they take advantage of that. As children, we are taught that to take what belongs to others is wrong. How do you feel about taking someone else's money? On the surface, you may think, hey, no problem. Look deeper, it could be a problem. This is but a very brief examination of some of the work ahead of you as you attempt to gain a successful trader's mind set. At this point it might be instructive to examine some of the qualities of successful traders as it relates to constructing your own Holy Grail.

    Responsibility. Successful traders take full responsibility for their trading decisions and trading outcomes. This is one of the most important qualities found in a good trader's mind set. It is the core of everything. As you move through life, you either believe that you can create your own desired results, or things just happen to you. When you believe you create your own results, trading then becomes a learning process. You can identify behavior that leads to undesirable results and take steps to correct behavior. IF you believe that success/failure is due to luck or external forces like the PPT, TPTB, GS or Ben Bernanke, you will continue to repeat your errors, and your trading career will be short lived and end in disaster. Take the responsibility upon yourself. Own it! This is difficult for many to do. Take the step. It will pay you huge dividends!

    Commitment. Success comes to those traders that treat trading as a business. What this means is you make the commitment to do what it takes to make your business a success. That entails work and study to lay the foundation for your business. IF you are not committed, you will not do the work required. You will get sidetracked by obstacles and the trading losses will mount.

    Lack of internal conflict. Lack of internal conflict goes to both trading psychology (the resolution of internal issues) and to the quality of your commitment. When you are totally focused on trading success without internal conflict, you are then totally committed. The more focus and fewer internal conflicts, the closer you get to successful trading.

    Independent thinking. Great traders tend to be independent thinkers. They are not influenced by what their neighbors, friends, relatives, gurus or what the talking heads on Bloomberg or CNBC say or supposedly think. They eschew all influences during trading that interfere with their pursuit of consistently extracting capital from markets based on their own chosen method. That method allows the successful trader to generate low-risk trades, manage the trades to cut losses short, let profits run and have a position sizing method to help them meet their goals.

    Efficient decision making. Research shows that people have developed various decision making short-cuts that lead to inefficient decision making. In fact, a whole new area has been developed in economics called Behavioral Finance. In summary, it now appears that due to these short-cuts, people tend to be risk-prone with losses and conservative with profits. This means that people have a huge problem with following the Trader's Golden Rule: Cut losses short and let profits run. Therefore, another quality of the successful trader is he hones his decision making process to overcome the natural bias involved in inefficient decision making. IF you need to be right and have a need to seek to control the market, you are an inefficient decision maker.

    These are briefly some of the qualities required. There are others such as positive attitude, organizational skills, lack of impulsive action and intuitive ability.

    A brief word about intuitive ability: it is developed over long periods of actual trading and study of markets. It is a sixth sense about when something is wrong or different. Do you have to be intuitive to be a good trader? Absolutely not. Until you reach that point, you do need to develop skill in handling positions when something unusual happens.

    Resources. This is but an extremely brief overview of a very complex subject. Here are some additional resources I have found to be extremely helpful to me in my development as a trader. First, and this I consider to be an absolute must, get two books written by Mark Douglas: The Disciplined Trader and Trading In The Zone. Tattoo both books on the inside of your eyelids prior to entering your next trade! Secondly, Dr, Brett Steenbarger. His blog is an absolute gold mine for traders! You will not be disappointed! http://traderfeed.blogspot.com/

    I would also suggest you pick up his book The Daily Trading Coach. It is not intended as a straight-through read but rather it is organized thematically dealing with various issues in trading psychology. When you run into a problem, you can go right to a probable solution. I would also recommend the work of Dr. Van K. Tharp, a very prominent trading psychologist.

    Again, most traders will skip right over all of this and that is OK! IF you chose to do that, the 5% are waiting for you. Come on in, the water is just fine!