Читать книгу Psychological Analysis - Adam Sarhan - Страница 35

Don't believe me? Try this challenge: I will give you $1 million cash right now (in unmarked bills) if you can tell me what the color red looks like—to describe it in a way that someone who has never seen it before would instantly recognize it. Go ahead, I'll wait. How about this: describe what chocolate tastes like so that someone who has never tasted it will know it when it touches their tongue. Don't worry, I'll stop waiting. You can't because no one can. That is an example of an intangible quality in life.

There are certain qualities in life that you have to experience in order to understand. It is impossible to explain what an intangible quality is because you have to experience chocolate to know chocolate. You have to fall in love to know what it feels like to be in love with someone else. It cannot be explained in words. But once you experience it, you know it. After you eat chocolate, I cannot give you vanilla and tell you it is chocolate.

That's exactly like the intangible quality of human nature that I look for in stock charts, and although it's impossible to describe, I know it when I see it. That's one part of psychological analysis. This book is dedicated to helping you develop the ability to detect human nature in the market. We start by considering some basic questions:

 Why do you invest/trade stocks?

 Why are other people investing/trading?

 Why are you buying/selling?

 Who is on the other side of a trade?

 Why are they buying?

 What are they selling?

These aren't questions you can answer with 100% certainty, but simply asking them will start making you aware of the presence of human nature in the market. Over time, you'll develop skills and an accurate feel for the market that will help you get in and out of positions before the crowd. It will become a priceless tool in your toolbox.

To be clear, at first, most people have an inaccurate feel for the market and they should not trust their gut in the market. Why? Because their gut is not properly trained. The goal is to rewire your brain and train your gut so that it provides an accurate feel that can help you identify opportunities and avoid common pitfalls. That will come with time, experience, patience, many (hopefully small) losses, and many (hopefully big) wins.

What's more important than recognizing human nature at work in the market is recognizing human nature at work in your own trading decisions. Hope, greed, fear, pleasure, and pain are some of the emotions that affect our decision‐making (and almost never to our benefit). You can learn to use psychological analysis on yourself, and in time develop a state of mind that helps you rise above your inherent shortcomings, and learn how to do what Benjamin Graham, Warren Buffett, and countless other one‐percenters have done, and turn yourself into your strongest asset and not your worst enemy.

It is important for you to know that, by no means, do I recommend that people trade by that “feeling” alone—it is simply a valuable skill to develop that can help you read the tape (a.k.a. the market) and complement your overall trading strategy.

People ask me what my strategy is and I always say, “a rules‐based discretionary approach.” Meaning, I have strict rules for everything I do, but I use my discretion, informed by psychological analysis, when it comes to executing my trades.

In a few chapters, I'll spell out my investment strategy, and then we'll explore how psychological analysis can help you establish the smart money mindset required to execute the strategy. Just like weight loss, trading is 99% psychology and 1% knowing what to do. Once you learn how to do this, you will be ahead of the crowd and well on your way to beating the market.

First, however, I have to make sure you understand the basics of how the market works, and how traders and investors have traditionally used fundamental and technical analysis to inform their trades.