Now that I have your attention, here’s why you probably should be extra careful when someone offers you free frequent flyer miles to go along with their product or service.

The basic idea is that often people focus on near term concrete goals (such as frequent flyer miles), and while trying to maximize these immediate and clear goals they forget or discount the real reason for their actions — which in your case is maximizing their financial outcome.

Dan Ariely » Blog Archive Behavioral finance lesson – frequent flyer points? «.

I make sure to read as much material Dan Ariely publishes as I can lay my hands on. I’ve read his first book Predictably Irrationaland am looking forward to reading his second: The Upside of Irrationality.

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If sometimes you think life is tough, hard going, or unfair remember this girl Jessica Cox.

Tags: airplane, armless, cox, difficult, flying, Hands, Jessica Cox, life, look ma no hands, motivational, pilot

I was thinking about trading strengths, weakness and was going to create a list for myself but found it hard to decide where to start. So I just started with brainstorming all the positive trading skills and traits, personal attributes and characteristics I could think of that successful traders might have. Here’s the list, see if I missed out on anything.

Discipline
Resilience in the face of adversity
Desire to continue and improve
Persistence
Curiosity
Creativity
Networking
Calmness
Courage
Competitiveness
Pattern recognition
Numerical skills
Practical (as opposed to idealistic)
Self confidence

Btw, INO is hosting a webinar and offering free access to MarketClub for 2 weeks, this isn’t one of those offers where you have to pay up front and cancel withing a certain amount of time, this requires no payment
info and cancels automatically in 2 weeks. Sign up here.

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Tags: competitiveness, courage, creativity, desire, discipline, free access, pattern recognition, personal attributes, resilience, self confidence, strengths weakness, successful traders, Trader, trading

If you’re trading or doing your job purely for money only then you’re missing out on some of the best motivators and sources of enjoyment and fulfillment in life.

via Dan Ariely

I’m reading the excellent book Outliers by Gladwell, it’s a fascinating analysis of success and how it happens, interwoven with biographies, history, psychology, science and social research. Some of the most interesting and engaging topics to read about. Reading the paragraph below just now made a lot of sense to me, especially after I was talking to a friend yesterday over some beers and German food. And ended up “complaining” to him that I find it difficult to detach myself from the markets and the research and projects I’m involved in. I tend to only do that when I’m on vacation. This wasn’t always the case. Back when I was working for the man, from 6pm and on weekends I couldn’t care less about work. The following snipet from the story about the Borgenicht, a poor Jewish immigrant family arriving in New York in the turn of the previous century pretty much explains why.

When Borgenicht came home at night to his children, he may have been tired and poor and overwhelmed, but he was alive. He was his own boss. He was responsible for his own decisions and direction. His work was complex: it engaged his mind and imagination. And in his work, there was a relationship between effort and reward: the longer he and Regina stayed up at night sewing aprons, the more money they made the next day on the streets.
Those three things — autonomy, complexity, and a connection between effort and reward—are, most people agree, the three qualities that work has to have if it is to be satisfying. It is not how much money we make that ultimately makes us happy between nine and five. It’s whether our work fulfills us.

Eventually the Borgenichts’ business they started in their $8 a month apartment with one sewing machine became one of the largest manufacturers of clothing in the US.

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This paragraph in the book I’m reading now, Flow: The Psychology of Optimal Experience, grabbed my attention.

Contrary to what we usually believe, moments like these, the best moments in our lives, are not the passive, receptive, relaxing times—although such experiences can also be enjoyable, if we have worked hard to attain them. The best moments usually occur when a person’s body or mind is stretched to its limits in a voluntary effort to accomplish something difficult and worthwhile. Optimal experience is thus something that we make happen.

Some generally good observations made by Ziad in a reproduced comment which can found here:

E-Mini Player: EMini S&P 500 Futures Trading Journal: Learning to Become a Successful Trader

Before I give my 2c on it, it sounds like Ziad is trading index futures. I don’t trade them (yet), I trade stocks. So maybe that accounts for some differences in approach. Also I have no idea who Michael is (no link to the original comment) nor what sort of trading issues he’s facing.

Anyway, the slightly different perspective I wanted to add is that it seems that Ziad is confusing simplicity with “clear cut”. Trading can be simple and ambiguous at the same time. I don’t see a contradiction in that. Anything related to taking on risk with expectations for a future outcome is going to be ambiguous by definition, on any single occurence basis.

As for setup, in my experience locking in on a decent risk:reward “setup” (i.e. pattern) and then building on top of it is a very valid approach. The problems start with people’s expectations, i.e. when people expect the setup to be “it” and all that’s required. This sort of expectation leads to ignoring other important aspects that Ziad mentions and also to frustrations as things don’t work out immediately even when the ‘setup’ is executed correctly. This in turn usually leads to changing the setup or replacing it and then repeating this ad infinitum (or ad going bust financially or as is more common, emotionally).

So what would I advise? I would advise someone to just pick a setup, preferrably one you know is traded by someone who is already successful. This is a natural starting point, you can’t trade completely without some definition of a pattern to look for. Then trade it day in and day out . Don’t expect it to work in some magical way like an on/off switched system, instead consider it a starting point, an over-simplification. And then over time, practice, observation of self and market gel it into a trading style that works for you. When does the ‘setup’ work, under what conditions, when does it do really well, when should you filter signals out and ignore the setup, etc. etc.

Overall I think every trader can benefit from Ziad’s observations and advice, especially on the learning process of observation, journal keeping, mental state etc. But one just needs to be aware that what works for one person doesn’t always mean is The best/only way to go about things. And yes that covers my advice above as well :-)

- via Andrew.