A Brief Comparison Between Stock Market Trading and Relationships (Huh?)

I wonder if anyone has ever navigated this topic.  I'll venture a guess this is a first.  To be clear, my comments are not directed at any person or situation, but rather are based on an aggregation of my personal experiences and those of others close to me.  I promise.  Okay ... out with it.

Over the past year, I've been taking classes and learning to invest in the stock market.  As I've thought about my first year as a "real" trader, I have found parallels between trading and relationships.  I'm hardly an "expert" in either area, except to the extent I have participated myself and heard both trading and relationship stories from others.  Romantic relationships and  friendships are an especially crisp comparison ... and the comparisons may apply with family members to an extent.  Among women, especially when men are not present, conversation inevitably flows to a discussion of what they did right or wrong in their dating relationships and friendships, and what will be different "next time."  Below are a few parallels, not in any particular order.
  
Engaging in emotional buying
The market - Emotional buying is when the market is bullish on a particular stock as an investment and without sufficient investigation, a trader may follow suit with a large position. 
Relationships - In relationships, this means getting in too fast without getting a little information first.  And often, the results aren't good.  In fact, often, they're dramatically bad, just sayin'.

Engaging in emotional selling
The market - Emotional selling is when the market is bearish on a particular stock as an investment, and without justification, traders may bail from their holdings at a minute profit or possibly a small loss.
Relationships - The same thing happens in relationships, a knee jerk reaction to a short-term or possibly unsubstantiated situation that leads to throwing the baby out with the bath water when something goes wrong.

Failure to rely on data
The market - Back testing using historical data is a way traders determine whether to enter a new position, or not. Traders use sophisticated software to back test potential trades.  
Relationships - As the relationship experts say, patterns seldom lie.  No software available.

Not placing stops
The market - An investor has the opportunity to make a "bottom line" of how much he/she is willing to lose in a trade.  When as the stock moves up, the stop moves up. If the stock moves down far enough, the stop is triggered and the stock is sold.  This is what is called "program trading" because it's automated.  I have traded in my sleep or while doing yoga.
Relationships - Theoretically speaking, we have "bottom lines" in relationships, too, that point beyond which we will not go.  The relationship gods don't expect you'll walk to the ends of the earth for anybody and everybody.  And no, it's not automated, nor can you manage your relationship bottom line in your sleep, although maybe a good night's sleep will clear your head.

Failure to follow trading rules
The market - Successful traders have rules for entering a new position and exiting existing positions.  These rules are based upon empirical data that suggests likelihood of price appreciation.  When traders follow their rules, they make money (assuming the rules are sound).  When they don't, it's anybody's guess, but it mostly doesn't end well.
Relationships - If someone fails to follow their own relationship rules, assuming they're based on common sense, trouble may await. 

Paralysis by analysis
The market - Active traders know that sources of financial market information can overwhelm. Worse yet, one analyst is bullish, the next is bearish. The best a trader can hope for is sighting of trends.
Relationships - Analysis from your friends and family is warranted if and when you ask for it, and you may want to note any consistent feedback.  But beware of people stepping into your shoes.  Do what makes you happy, don't over-analyze, and by all means, throw away your requirements "checklist."

When things go beyond control
The market - Sometimes, a trade goes wrong, even though the trader follows his/her own rules, sets appropriate stops/boundaries, and doesn't engage in emotional trading.
Relationships - The same is true in a relationship. Sometimes we may play the game according to our own rules and set appropriate boundaries, but still get burned in the process. When this happens, we have to review whether our rules need alteration, or whether it was just forces beyond control that led to the loss.  And as everybody knows, when a relationship fails, it is a loss.

Making revenge trades
The market - In the market, revenge trades are what a trader does to preserve his/her position after a bad trade.
Relationships - The rough equivalent, in relationship terms, is dating on the rebound.  The failure rate is 90% according to relationship experts.

Not sitting on the sidelines, even if you should
The market - Right now, market volatility is substantial.  Many traders are sitting on the sidelines with all cash.  When I first started trading, I used to aim to have most of my assets invested in something. One day my brother said to me, "Wait for the good trade."
Relationships - In a relationship sense, it's okay to sit on the sidelines, take a break, catch one's breath. In fact, it's healthy to do so, even if you reinvest in the same "investment" at a later time.  And as my friend once said to me in regards to waiting for a great relationship ... "wait for the great guy."   Duly noted.

Taking the emotion out of it
The market - The goal of most traders is to limit emotion. It's discussed frequently in financial markets literature.  That's because emotional trades are unsuccessful on a long-term basis.
Relationships - In relationships, emotional vulnerability is the name of the game.  After a while, you have to stop keeping score, quantifying, and analyzing.  Just go with the flow.  You can't play if you don't feel.  The good news is sometimes, our trades and our relationships will work out.  And that's a beautiful thing.  Nothing like having one's emotional wallet overflowing with abundance. { ;) }

Stock Futures Suggest Money In Your Mattress Is a Better Option

"My interest is in the future because I am going to spend the rest of my life there." 

-- Charles F. Kettering

If you have been watching the stock market lately, you are aware that it's been dropping like a hot potato, and demolishing your 401K, if you have one. Who knows what's going to happen next, but it seems like every day, we're hearing more bad news that offsets any good news we're hearing about company earnings or the global economic recovery. How's a body to know what is coming on the morrow?

A psychic may be able to provide a forecast, but I wouldn't necessarily bet on it. If you enjoy astrology and are interested in how the stars and planetary positions may impact your 401K and investments, read The Merriman Market Analyst, a weekly report written by a financial astrologer that may provide some keen insights.

However, even more reliable is reviewing futures outside of market hours.  Futures are contracts to buy a stock or group of stocks in an index at a predetermined date and price.  The purchaser of a futures contract must fill the contract terms, unlike an option which is a right but not an obligation to buy.  And futures are bought and sold, even outside of normal trading hours, so they can provide a little hint of what the upcoming trading day may bring at the opening bell.

Some of the futures websites I have been known to review before the market opens at 9:30 am ET are:

CNN
CNBC
Bloomberg
Wall Street Journal

These sites track the sale of futures contracts on a more-or-less real time basis, and that usually is what establishes a basis for the trading day.

All of that said, perhaps money in a mattress is the way to go these days.  Dow futures are down over 200 points as of 7:30 am ET this morning.  We have a nosediving market which has no mercy on small, buy-and-hold investors.


Legal disclaimer: The above hints and comments should not be construed as financial advice.

Stock Option Trading Terms for Ladies Only

Ladies, during the past week, I've been swimming in the sea of stock option terminology found at Investopedia. I'm trying to do something while I am gainfully unemployed, and option trading was the flavor of the week.

If you had employer-issued options, once upon a time. Option price, strike price, expiration dates .... those are the basic terms used in stock options trading. You may have needed to know these terms when you received or exercised a stock option from your employer, if you were so lucky. Beyond saying that options allow you to buy and sell what you may or may not own, I barely understand options myself.


Wait til Cosmo hears about these goodies. Today, my investigation has unearthed some options terms that have left me speechless. Now I'm convinced the options trading back room must be an interesting place to have, or, better yet, overhear a conversation.
Disclaimer. You may blush when reading some of these terms and my comments, which are not to be confused with definitions. And please don't blame me. I'm only the messenger. Besides, if your daughter is considering a career in options trading, you will certainly want to speak her language. Well, maybe not.
Here we go ........
Alligator spread - not to be confused with the bear call spread, the bull call spread, the backspread, the frontspread, the gutspread, or the cat spread

Bullet dodging - understandable, perhaps

Contango - a Latin dance? would one ever do the contango while bullet dodging?

Country basket - okay, so options traders have read Little Red Riding Hood?

Cum rights - no, I promise I am not making this up

Double no touch option - we ladies all know what that means

Double one touch option - hmmmmmmmmmmmm, okay but just once, well, maybe twice

Down and in option - there's also a down and out option in case you were wondering

Exercise backdating - if this is what I think it is ... I need to backdate enough exercise for at least the last decade

Exotic option - need I say more?

Iron butterfly - In-A-Gadda-Da-Vida baby ... the long version, truly

Knock out option - knock out, meaning "hot babe" or "just pummeled my opponent out in the back alley"

Long jelly roll - perhaps a jelly donut shaped like a maple bar

Married put - obviously options traders may be married, and unfortunately, no swinging singles put (or call) options are noted

Multi-leg option - before the married put?

Naked put - also noteworthy are the naked call and naked options

Outperformance option - really? wow...

Overhang - what happens if you eat too many long jelly rolls and fail to use exercise backdating to correct long periods without exercise

Piggyback warrants - Jessica Rabbit would be sad at the lack of pattycake warrants

Plain vanilla - the opposite of the exotic option, presumably

Quadruple witching - there is also triple witching, if you want to reduce risk

Roll back - other rolling options are roll forward, roll down, or roll up ... really, roll up?

Seagull option - Invented by the Mormon pioneers, perhaps?

Strangle - this is also called the squeeze option, if you prefer

Strap - ahem ... these terms just go on and on

Strip - noooooooooooooo ...

STRIPE - swap transferring risk with participating element ... huh?

Witching hour - the time when you may engage in triple or quadruple witching activities

Yes, all of the above are unquestionably financial terms that you might need to use in a sentence on the trading floor. So now that I have exhausted everyone with my non-exhaustive list of stock options terms, I will leave everyone with a final thought: Wow. Finance is so very much more than I ever dreamed.