Travis Anderson Guest?post
Article Summary:
The Three Phases of a Trader’s Education: Psychology, Money management, Method by Jeffery Kennedy
This article is an advisory excerpt written by Jeffrey Kennedy (Elliot Wave International) Chief Commodity Analyst. He recommends that aspiring traders adhere to three phases of trader’s education. The first phase is?Methodology?. This refers to the development of a trading platform. ?Money Management? The next phase is called?Money Management? This phase provides an analogous framework of examples for managing portfolio wealth and tactical risk mitigation. The final phase of the article is?Psychology?. Here the author discusses the importance and benefits of group and personal psychology.
The author also mentions that traders who are aspiring to trade should use the phases in reverse. The author recommends that traders first understand psychology on a personal level, then learn from the crowd to be able to manage their money. Focusing on the task at hand will reduce distractions.
To my dismay, the three phases of Mr. Kennedy are very applicable to everything we do professionally or in our personal lives. Take a second to think about it. We all belong to an organization, or at the very least, a group of people. Psychology is a constant part of our lives. Money management is essential for everyone in this money-driven world. What about?Methodology? Everything has a system! Consider your daily routine ….wake, get up, make coffee, put on your pants, check email, and start work. Let’s go on a journey with these phases in the suggested order. This will help me to understand how project management works.
How does project psychology impact our decisions? Each person’s answer will be different, depending on the project. One thing is certain for everyone: Everyday, people are emotional beings with a variety of behaviors that impact our lives. Whether you are a project manager for a large group or a handful of programmers, your decisions have a profound impact on the rest of the team. It is important to understand yourself and control the effects of your decisions by communicating effectively at all levels (up and down) of the organization.
Reality is what you perceive! How do you perceive the project?
We will examine how a project manager manages a capital investment opportunity after understanding the effects of psychology on a project environment.

?Money Management?
The CEO has chosen you to be the most competent to evaluate a capital opportunity for $100,000 today. Depending on the economy at the end, the investment could fetch one of these equally probable returns:
Pessimistic: ? $80,000
Most Likely: $110,000
Optimistic:???? $140,000
Get deep, get rid of those old texts books, and get ready for some fun! Your sponsor is confident that you will use logic and money management techniques to decide whether to?go? or ?no go? This project opportunity.
Given that all scenarios have the exact same probability, the expected payoff for each scenario is:
C1 = (probability)(pess+most+opt)=(1/3)(80,000+110,000+140,000)=$110,000
This is a 10% expected return on an investment of $100,000. Remember that there is a discount rate.
You could put your money into the stock market. You can find a common stock with the same risk that is perfect for you by doing some research. Stock X is expected to reach $110 in a normal economy. Stock X will drop in a slump, and rise in a boom. Stock X and your investment look identical:
Pessimistic: ? $80
Most Likely: $110
Optimistic:???? $140
Stock X currently has a price of $95.65 and offers an expected return rate of 15%