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Analysis written in a straightforward way so that everyone understands.
only a small few who get it consistantly correct and you are certainly
for putting this all together and sharing! BHW
Stuff! Kenny has shown time and time again the ability to show us direction in
these markets. Khalsa
Kenny, I appreciate your insight and analysis. You make sense of what I can rarely see.
Thanks for sharing. Gene
Took a gold short at 1240
just closed at 1203 :-)))))))))))))))))) ........ top call!! Gekko
World: Gerald Ashley
The Impact of
Explosive and Gradual Change - Its Effect on You and Everything Else
Gerald Ashley: Two Speed World
Gerald Ashley, author of 2
Speed World and Financial
Speculation, talks to Kenny of www.tradersdaytrading.com.
Gerald is an advisor, a writer and a speaker on business risk and
decision making. Gerald has over thirty years of experience in
international finance, having once worked for Baring Brothers in London
and in Hong Kong, as well as for the Bank for International Settlements
in Basel, Switzerland
The Gerald Ashley Interview
Kenny: Hello Gerald and welcome to
Tradersdaytrading.com.... Your two books Financial Speculation and more
recently 2 Speed World cover a topic that is of great interest to me,
and I believe that most traders would benefit from gaining a better
understanding of the psyche of the markets and how we ourselves tend to
react in certain circumstances.
Thank you - Firstly Financial Speculation will be on much more familiar
territory to your readers as I try to give an insider's view of markets
having been in them for over 30 years.
do you believe that readers can learn from reading 2 Speed World?
The latest effort, Two Speed World opens up the wider issue of how we
make decisions and deal with risks and uncertainties and what are the
best approaches. This is not just about markets but business,
innovation, running organisations etc. As such it’s a business book
rather than just focussed on markets.
Kenny: As I am talking with you,
it has been an extremely turbulent couple of weeks in the markets with
the Dow Jones Industrial Average losing nearly 2000 points, the
S&P500 250 points, and the Ftse100, 1000 points or so.....some
very large moves in a very short space of time, is this a classic
example of a 2 speed world 'disruptive' event?
Yes – In general, the financial markets do demonstrate the two modes of
"incremental" change & "disruptive" change. This is clear to
anyone who trades them, we look at this in Two Speed World though there
is much more research to be done.
Readers need to start focusing on Complexity Theory and Complex
Adaptive Systems....these ideas demonstrate how markets and general
social groups can suddenly "flip" from one mode to the other. It’s the
future of finance and trading and very fascinating.
Kenny: What I see time and time
again in these large moves is many traders trying to buck the trend by
trading against it, is this because they have failed to adapt quickly
enough to the changing circumstances?
Yes the old phrase "The Market is Wrong!" In general traders suffer
from confirmation bias, i.e. they only believe the facts that suit
their view, this can be a quick way to lose a lot of money. Successful
traders listen to the market.
Kenny: Is it possible for us to
train ourselves to adapt more quickly to rapidly changing
There is a tension between racing around for the sake of it and being
able to change your views and positions when the facts change. This is
a skill not easily obtained - experience and knowledge are vital. The
less emotional you are the better trader you will become - don’t see
trading as "exciting" (it isn’t) and have realistically low aims (a
consistent 10-15% annual return would be an excellent record)
Kenny: What is the
single one thing that we can do to learn to adapt our mindset more
quickly to cope with the new circumstances?
Be less opinionated about the markets, listen to what the market is
telling you and stop trying to tell the market what it should be doing!
In fact having virtually no opinion can be a strong plus in trading –
but staggeringly hard to do!
markets are always going to be volatile at times, we as traders are
looking for certainty in an environment where certainty is impossible,
what can we do to cope better with this lack of certainty where a
mistake can become extremely costly?
It is the human condition to want certainty - in fact we
crave certainty. (Maslow's hygiene factors explain this well). We are
gripped by those that promise certainty and can "predict" the future,
but we must learn to "let go" and accept that its the uncertainty that
generates the profit potential.
Kenny: It is my
experience that Fear and Greed are the main drivers of market
movements, where markets 'climb a wall of worry' and go down the 'Slope
of hope'....what is your version of this?
Very similar but in fact I label the emotions slightly
differently, I think markets climb a Wall of Fear (when all fear has
gone and only sublime confidence is left we are normally very close to
a market crash) and you are right we slide down the slope of hope (only
when all hope is extinguished does a market turn).
Kenny: It is commonly
recognised that the 'majority' sell at market bottoms and buy at market
tops, the exact opposite of what they should be doing, why do you think
this is, what causes us to do this?
Traders are very influenced by noise,
screaming headlines etc. Keynes (himself a very successful speculator)
identified that the successful investor is good at anticipating what
everyone else is going to anticipate! Most investors fail to think
through this process and end up following the initial herd rather than
the underlying prospects for the marketplace. I would say they are not
listening properly to the market.
Kenny: Are there
patterns to this behaviour and if so what creates these cycles?
Speed World-2: The
Gerald Ashley Interview Part 2
2 Speed World
by Gerald Ashley
Books by Gerald Ashley
2 Speed World
by Gerald Ashley