"ALGO-TRUMP"- the algorithm

One of the algorithmic trading that has become popular in recent years is to buy and sell stocks in conjunction with President Trump's Twitter words.

This is based on the fact that the stock price of a company that President Trump criticized by name on Twitter goes down, and when Prsident Trump tweeted a specific keyword, the system automatically reacts and buys and sells stocks.
In this way, it is also a feature that algorithms that match the trends of the times continue to be developed.

Although it is an algorithmic trading with great merits, it is not widely used among general investors because it costs a lot to introduce the system.

On the contrary, institutional investors and foreign investors who have financial power are actively using it, and it is also regarded as a problem that the gap with general investors is widening.

Harding phenomenon

 

What is the ''Harding phenomenon''?
The harding phenomenon is a word that comes from the English word "Herd" (flock), and means that human beings tend to act according to the thoughts of others and many people.    Speaking of phenomena that are familiar to us, we buy products that are in fashion, and the queues call for more queues.The Harding phenomenon is known as one of the insights in "behavioral economics", but a synonym in behavioral economics may be the "bandwagon effect".   Behavioral economics has the perspective that "humans seem to be rational and behave irrationally" and "the economy created by humans also has irrationality born from such a psychological aspect", and stock investment and economy It can be said that it is one of the academic fields that are attracting attention in economics. We can see this tape of irrational behavioral action lots of times in financial markets when we see when price makes big divergence  agains company fundamentals. 

Is behavioral finance useful for investment?

Behavioral finance is the study of the influence of psychology on the behavior of investors or financial analysts. It also includes the subsequent effects on the markets. It focuses on the fact that investors are not always rational, have limits to their self-control, and are influenced by their own biases.

An example of the harding phenomenon in stock investment is the case where the stocks being bought are bought further and the high price is renewed.  In addition, it can be said that the irrationality of the harding phenomenon was glimpsed in the bubble formation of the subprime loan market that started the Lehman shock.   

Especially if you are a beginner in investment, you may intuitively think that the stocks that are going up will go up even more, and you may buy them and grab a high price. Behavioral economics proposes that human beings have the property of "heuristics" in which they make decisions based on past experience, apart from making logical thoughts when making decisions.  For example, this heuristic works well when multiplying and when making daily habits, but when it comes to investing, that thought can be a nuisance. Emotional investment decisions that are not based on rules do not have a statistical advantage and the method does not always work.   It is often said that "90% of individual investors lose", but many of them include failures due to lack of understanding of human irrationality and psychology. Isn't it?     Then, what kind of attitude should we take in investing so that we do not lose 90%?

Metacognition is important

In trading, it can be said that there is no way of thinking or method that "if you do this, you will definitely win", but what is important is "metacognition".  "Meta" is a prefix that means "beyond" and "contains", and "metacognition" means "recognizing cognition."   It is confusing to write cognition as cognition, but it can be said that it refers to the state of being able to see oneself objectively, what one is thinking.
What I am doing now can only be expressed from my own experience.   However, by reading a book or learning a new concept, you will be able to express that behavior in a new way.

Behavioral economics focuses on human scientific psychology, and human psychology such as "status quo bias" and "loss effect" will help us to see our thoughts and actions objectively.
If you are an investor, you will understand that you can trade calmly when you are winning, but you will panic or your mentality will be shaken when you are losing and you will make an appropriate trade. I think you have some experience.   Of course, everyone suffers failures and losses, but in order to reflect on them and improve them, it is of course important to omit "why did they fail?"   In the process, metacognition may be useful for verbalizing and embodying failure.   How to acquire metacognition   As a way to acquire metacognition, as I wrote earlier, reading a book to acquire new knowledge and making it a habit to draw a cycle to improve one's behavior can be mentioned. It may be a good idea to notice ideas and habits that you are not aware of and try to live while being aware of how to correct them.

If you know the word "harding phenomenon", you should have the perspective of "because it is a harding phenomenon, isn't it profitable to make a contrarian here?" Can be done.  It will be possible to broaden the range of investment and thinking by not only synchronizing with the way of thinking around you, but also by firmly holding your own investment axis.   Learning the knowledge of behavioral economics, not limited to the Harding phenomenon, is useful for making investments, so it may be good to learn it.

  WHAT IS HARDING PHENOMENON IN TRADING? - YouTube

RANDOM WALK

The random walk theory is a theory that explains that "the movement of stock prices cannot be predicted." Simply put, no matter what has happened in the past, there is always a 5: 5 chance that tomorrow's market will go up or down.

The random walk theory is a concept in finance that suggests that stock prices follow a random and unpredictable pattern, making it difficult to predict future price movements. This theory is based on the idea that past market trends and performance are not reliable indicators of future market performance. Despite this, the theory of random walks does not mean that it is impossible to make a profit in the stock market, as the share price of a company is ultimately tied to its future performance and profitability.

In contrast to random walks, speculative trading involves aggressive buying and selling of stocks in order to generate a profit that exceeds the average market return. This often requires expert knowledge and analysis of market trends, but it can also involve significant risk. In contrast, passive investing aims to achieve returns that are in line with the market average, and this typically involves a more straightforward investment strategy, such as buying stocks in a market index.

The theory of random walks suggests that it is difficult for active traders to outperform passive investors, as the unpredictable nature of the stock market makes it difficult to consistently generate higher returns. To mitigate the impact of random walks, traders can focus on more predictable and liquid markets, trade in blue-chip stocks, follow market flows, trade based on news events, and trade during market openings or mid-day. However, even with these strategies, it is important to recognize that the stock market remains inherently unpredictable and that there is always some degree of risk involved in trading.

The theory of random walks has been widely researched by economists and financial researchers. One of the earliest and most influential proponents of the random walk theory was French mathematician Louis Bachelier, who published a PhD thesis on the subject in 1900. In the decades since, many economists and financial experts have conducted research on the random walk theory and its implications for financial markets. Some of the notable scientists and economists who have contributed to the research on random walks include Paul Samuelson, Eugene Fama, and Burton Malkiel. Today, the concept of random walks remains a central topic in the field of finance and continues to be studied by researchers in universities and financial institutions around the world.

Much less room for human judgment right?

So why can't active trading outperform passive investing? In active trading, the professional manager makes full use of theory and data to determine when to buy and when to sell. However, using the theory of random walks based on the theory of probability, it is impossible to predict the market price no matter which method is used. Sometimes it succeeds, and sometimes it does not, and the result is at the level of the market average. However, active trading is more expensive for managers and inventory analysis, so the results are worse than passive investing.

While the theory of random walks suggests that stock prices follow a random and unpredictable pattern, there are a few strategies that traders can use to mitigate the impact of random walks and potentially improve their returns:

1. Trade only in liquid markets: Liquid markets are markets that have high trading volumes, which can make it easier to buy and sell stocks quickly and at reasonable prices.

2. Focus on blue-chip stocks: Blue-chip stocks are stocks of well-established companies with a history of stability and steady growth, which may be less susceptible to the effects of random walks.

3. Trade based on market flows: Monitoring market trends and flows can help traders to identify trends and make more informed trading decisions.

4. Trade based on news events: Following news events related to the stock market and individual companies can help traders to stay informed about market conditions and make informed trading decisions.

5. Trade during market openings or mid-day: Trading during these periods may offer more opportunities to trade and take advantage of market fluctuations.

It is important to note that while these strategies may help to reduce the impact of random walks, they are not guarantees of success and there is always some degree of risk involved in trading. Additionally, it is important to have a well-informed and diversified investment strategy in order to mitigate risk and achieve long-term success in the stock market.

Why will women traders take over the world soon ????



1) We all know that the womans can study much faster. Trading at a higher  level requires countless hours of study and focused research. The same holistic approach to learning that helped many women in elementary school will also benefit them in their careers as a trader. They tend to be more attentive, persistent, and more eager to learn than men. The biggest plus in trading is the speed of solving problems, that is, the operational speed is much faster for women than for men. Therefore, the Head of Trading or Head of Treasury departments prefer to hire female traders on the desk.

 A WOMAN IS UNSTOPPABLE AFTER SHE REALIZES SHE DESERVES BETTER

2) Women are excellent  at multiple  tasks. And they do it better than men. Watch how women traders manipulate several positions and track financial indicators, precious metals, technologies, commodities, repo deals and Eurobonds, and now try to find a better repo deal performer than an aggressive girl ... Any other alpha male would have given face to his boss from countless repo transactions that need to be closed for the new year. 

   WONDERFUL STRONG ELEGANT AMAZING CONFIDENT

3) Women are more inclined to take risks. You may remember this thorough study, which showed that women are better investors than men because they are no longer risk averse. Men hold bad trades longer and suffer big losses. It turns out that testosterone isn't always your friend.

Compare a man a trader and a woman. When a woman loses a loss, she immediately runs to solve the problem, while the alpha male takes a bottle of whiskey and starts taking even more risks and does this until he lowers his account to zero or gets a rolling pin in the bastard from a angry wife who pulls out a computer and says when you will become a normal person.

IM SORRY YOU SEEM TO HAVE MISTAKEN ME FOR A WOMAN WHO WILL TAKE YOUR SHIT-Ali Parker

4) Women have the best role models. The women are still working on the glass ceiling. They need to be smarter, sharper, and of course better behaved if they want to be successful. If you take global banks, then there are alpha females in expensive glasses and are actively drawing fat clients into the client base, clevering their CFA with mega words ... And what can men do ???? Current only yell Trading is not about talking is about making money !!!!There are still too few female executives, but they outperform their male counterparts by not making headlines for bad behavior while managing their personal lives successfully.

 DONT BE A WOMAN THAT NEED A MAN, BE  A WOMAN THAT A MAN NEEDS

5) Women always look good and take care of themselves, especially those who cut money. Yes, yes, it's true ... And better take care of yourself before it's too late, the world will be seized by traders women, politicians, women, and so on. ).

 


PS: I JOKE A LITTLE BUT 98% HERE IS TRUE

Sentiment Zone Oscillator-By Walid Khalil, CFTE, MFTA

Intresting tool for traders "Sentiment Zone Oscillator" (SZO), that was made by Walid Khalil that was introduced in "Stocks and Commodities" Magazine in May 2012. SZO is tracking swings in the marker sentiment.

GandalfProjectResearchSystem-By Domenico D'Errico and Giovanni Trombetta's

The Gandalf Project Research System strategy was published in the August 2017 "Stocks and Commodities" article titled "Artificial Intelligence For System Development" by Domenico D'Errico & Giovanni Trombetta.