Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Psychological Capital (by phantomcapital)

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Traders have two types of capital at their disposal each
day; financial capital and psychological capital.  Financial capital is obvious, it’s the cash
we have to trade with.  Psychological capital
is harder to measure; it’s the energy and zeal we approach each day with.  However, both are limited in supply no matter
how energetic the trader is. 

So why is psychological capital a relevant topic to ponder
for the trader?  Simply, as a trader, we
do not work a salaried or hourly job. 
Hours worked do not directly translate into the amount of money we make.
 Often the biggest paydays happen in the
matter of hours or a few short days.  The
key here, and this is important, is to have the mental energy to be ready to
capture the big moves in the market instead of being worn down by the inconsequential
grind of a flat market. 

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Once In A Blue Moon Stand (by phantomcapital)

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Very rarely do I take a
directional stand on the market.  In
today’s environment it seems like yesterday’s profit turns into tomorrow’s loss
more often than not.  Then there are days
like today that scream, “if you’re ever going to be a contrarian trader, now is
the time to do it.”  Multiyear
highs!  Gold!  Hope for August jobs!  Cue the financial media mania:

CNBC Genius

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My Safety is My Trigger Finger (by Phantomcapital)

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All traders must figure out the style of trading that best suits them in order to survive and profit in the markets.  I quickly discovered that my style was best suited for placing leveraged intraday bets on the S&P via options.  When I would describe this to other traders they would look at me and derisively say, “oh, so you’re just a day trader.”  This absolutely infuriated me at first, but then I came to not only be ok with this label but actually embrace it.  Why?  Simply, I find that my safety is my trigger finger.

Thisismysafetysir

 

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Theory of Time and Price (by Phantomcapital)

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One of the more commonly held beliefs is that time is constant.  One hour is 60 minutes or 3,600 seconds.  Furthermore, the equity trading day is 6.5 hours, 390 minutes, or 23,400 seconds.  This we can all agree on.  However, time, when measured by price, is no longer constant.  Bear with me, I promise this is going somewhere very meaningful for a trader. 

Price is determined by buyers and sellers acting on emotions, psychology, and information flow.  Emotion and psychology are human, information flow is mechanical.  Therefore, information flow is king when discussing time.  Information can be a streaming chart, a tip from a friend, earnings, a news event that has crossed the wire, etc.  Understanding the history of information is crucial to understanding how time, when it refers to price, is NOT constant.

Speed of Information

 

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Flight to Quality (by Phantomcapital)

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Over the past three years we have been beaten over the head with the concept of flight to quality; simply as the equity market falls the bond market rallies.  Global unrest crushes equities, the warm fuzzy blanket of Quantitative Easing rallies equities.  Now I present to you the idea of equity flight to quality.  Huh?  Yes, flight to equities for safety.

Here is the theory.  If I’m a global fund manager, especially in Europe, I’ve seen my local stock markets get crushed so I need to find somewhere to put my money.  I don’t trust European bonds, I don’t trust European stocks.  Precious metals are volatile especially if based on the wrong currency.  So I look across the pond and see US Treasuries and US equities.  US Treasuries are offering record low yields; the 10 year just fell to 1.5% and that just doesn’t look very appealing.  This leaves US stocks. 

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