TRADERS’ MINDSETS

25 02 2015

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It has been theorized that your state of mind will dictate your trading methods. Experts in the field of trading psychology have pinpointed three main states of mind and how each has a direct effect on a trader’s profitability.

These three mind states are “having”, “doing” and “being”. Psychologists have noted that those new to trading start with a “having” state of mind. As they gain more experience, they move on to a “doing” state of mind. The pinnacle of profitability occurs when a trader moves into the last and final “being” frame of mind.

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The “Having” Mind Set

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A novice trader may focus primarily on profits. In this “having” state of mind, they are out of sync with the markets. They are blinded by their obsession to obtain the all mighty dollar and what it can afford them. Trading is not viewed as a job that must be mastered, but as a vehicle to escape from a world of mediocrity.

Many traders are in the business to make money, as well as they should be. However, if they are blinded by greed, they tend to take uncalculated risks. Looking at the potential payoff without carefully calculating market trends and other factors is a recipe for disaster.

It is impossible to graduate to a high performance level when you concentrate on “having” instead of how the game is won. If you trade in a “having” frame of mind, you may become frustrated when profits are not immediately forthcoming. With frustration comes a lack of focus. Without the ability to focus, you cannot gain knowledge from your experience on the trading field.

Other negative consequences of this mindset are feelings of frustration and anger. Frustration stemming from a lack of expected profits and anger directed at oneself or the market in general. These adverse emotions will only cause further decline in profitability. Without witnessing gains from one’s efforts, an individual may not give their best and may be tempted to “throw in the towel”.

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The “Doing” State of Mind

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If an individual continues on to trade another day, they will eventually move from a “having” to a “doing” state of mind. Learning that there is more to trading than the amassing of money, a trader will turn their focus on learning new methods of trading and what does and doesn’t work.

This state of mind is still primarily centered on how to turn a profit. Although a “doing” mind state is essential to becoming a seasoned adept trader, the main focus is still short of the mark. It is crucial to know what works and what doesn’t. However, a skilled trader will tell you there is more to the business then choosing one method and using it arbitrarily to make trades across the board.

Becoming a trader of means requires not only a winning attitude, but also a fine honing of trading skills. To develop these skills, you must make trades using various methods under a wide spectrum of market conditions. Only then can you develop the needed intuition to master the art of trading.

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Pinnacle of Profitability: The “Being” State of Mind

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A successful trader almost instinctively knows how to make a trade using the best method available for the current market trend and/or condition. This ability does not occur overnight. It is only accomplished through perseverance, knowledge of various trading methods and learning which one works given a particular market condition.

No trade is ever a “sure thing”. However, a profitable synchronicity almost naturally occurs when you are faced with a potential trade, have a feel for the current market trends and conditions, and utilize the method best suited for a potential payoff. This “being” state of mind ultimately lends itself to long-term success in the high stakes of trading.

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First major trade 2015, MER <– Divs Play

24 02 2015

**** Entry Post (24feb’15) major trade means, ~500k to 1M as target exposure. entered on 281/282 level, risk level @280/275 ; reward level @ >300 ; plus 8+ divs (march 18, ex-date) initial exposure ~400k, plan to add more on dips or @ break-out of 285…. tic tac 🙂 entry  

 

MER - feb 27' 15

**** update post #1 (27Feb’15) MER - Update 27Feb 2015 adding on dips… short term trend + flag still intact. let’s see next week 🙂 accumulated position to date:

*** update Post #2 (13Mar 2015) Full Position Target of 1M achieved. As anticipated, the price may dip down to support level of 275 and it did hover up and below that level. I also did made the planned buy on dips until the 1M is completed although I missed  most of the dip buys at floor support level. Then for almost 2 weeks the tug of war between bears and bulls ensued up until todays’ strong Bulls move sending it back to 280. Next Week is the DIVs ex-date. Let’s see what happens then. mer 13mar15 *** update Post #3 (20Mar 2015), Post Ex-date; MER - Weekly Update 20 Mar 2015 MER dipped back to 275sh on the start of week that shall see the ex-date and I really wonder what drives them to sell that way?! At the ex-date (18Mar), MER dipped to as low as 265! 2 days after and it’s back to 271. Hmmm, had I have some spare funds I could have bought on that dip. So I’ll just keep note of that strategy for the next plays to be undertaken. Let’s see how MER moves next week 🙂 With that, the (3600shs x 8+ less tax) divs is in my bag waiting to be credited. DIV HISTORYMER - Weekly Update 10 Apr 2015 - ELECTROCUTED *** update Post #4 (10Apr 2015), MER ELECTROCUTED!! 😦 ** UPDATE Post #5: Weekly Chart_ May 22, 2015 Slowly But Surely… 🙂 MER Weekly - May 22 '15

JUNE 05, 2015

FINALLY PUT CLOSURE ON EPISODE TODAY. THE GAINS ARE FROM DIVIDENDS PLUS SOME APPRECIATION OF PRICE… ALMOST 4 MONTHS. WAS IT WORTH IT? OF COURSE!!! AS LONG AS THE RULE OF “DO NOT LOSE MONEY” IS OBEYED…. A GAIN IS ALWAYS A GAIN TO BE THANKED WITH 🙂





‘How the Rich gets Richer

12 10 2011

“The way it works is this: the rich sell for $8, which means the poor buys for $8. Then when the stock price decreases to $6, the amateur sells it back to the rich, who of course now pays $6 for it back. Then when the stock price goes back to $8, the rich sell it to the poor again, which means the poor pays $8 again. Then when the price decreases back to $6, the amateur gets nervous again and sells it back to rich for $6.

Believe it or not, this happens all the time and is one of the many reasons why the rich get richer and the poor get poorer. This is one of the main reasons for the need for education in the fields of business and investing. In Proverbs 4:7, the Word of God states “ Wisdom is the principle thing; Therefore get wisdom. And in all your getting, get understanding”. The sad part is that amateur investors often have neither and think that God is speaking for his own health; But He’s not. He’s speaking for ours…”

http://www.gurufocus.com/news/4199/investment-warfare-be-fearful-when-others-are-greedy-and-greedy-when-others-are-fearful–warren-buffett

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Personal Note: 

The Rich have plenty of money to invest, and more.

When they have passive income much more than they need to spend, they start to have surplus of invest-able funds or Capital.

Having enough CAPITAL at bay, they can afford to wait for the right timing to buy cheaper. And they can afford another wait until the price reach higher than their buy costs. When the right time comes, they sell and take the profits.

On that process, they were able to increase their Capital and so they get richer. They then wait again for the next cycle to come to them.  That’s Cool!

Very simple isn’t it? Indeed…. But!

It is the stage of having “Passive Income > Expenses” that is the most difficult part to achieve. A person wanting to be rich must first strive to get at that level and when he does, everything else will follow. Yes, easier said than done.

TIME, another important aspect. Experience and learning  does not come overnight, it takes times to be learned and manifest as a character within.

“Some of the best lessons we ever learn are learned from past mistakes. The error of the past is the wisdom and success of the future.” Dale Turner

“Practical wisdom is only to be learned in the school of experience. Precepts and instruction are useful so far as they go, but, without the discipline of real life, they remain of the nature of theory only.” Samuel Smiles

“Wisdom and understanding can only become the possession of individual men by travelling the old road of observation, attention, perseverance, and industry.” S.S.

Being patient and persevering will work in favor of a person wanting to reach greater highs. Because as time passes by, plenty of learning experiences will be brought upon them. No one wanting to rise higher will be spared from trials and challenges, from temporary defeat and sufferings. Only those who persevere and kept on trying shall achieve WISDOM, to realize anything that they desired.

“Capital+Time+Wisdom”

That is the formula to get RICH, the TRUE RICHES that will be retained for long term and not the RICHES that easily comes and easily goes.

Now, Do you still want to get RICH?





Lessons From Irwin T. Yamamoto

3 10 2011

Irwin T. Yamamoto

One of the greatest privileges of my life was my friendship with Irwin T. Yamamoto who passed away two years ago today on July 15, 2009 at the age of 54.

Our friendship began eight years ago after I wrote something that discussed The Yamamoto Forecast and his excellent track record. Following that Irwin contacted me by email and our friendship flourished in all of the years that followed.

We would talk at least once per month about the market and I could always count on him offering a different perspective. In fact, in 2008 my wife and I traveled to Maui with the goal of meeting and spending time with the man who will always be known as “The Maui Contrarian.”

As with all great friendships, I learned a lot from Irwin and I’m better at what I do because of him. While our strategies were very different, it was also these differences that I believe also made us so interested in one another. They say that opposites attract and that you frequently learn from people who are the most unlike you. This was especially true with us. In my case, I really wanted to learn how Irwin was able to achieve the level of success he had for so many years and at the same time make it look so darn easy. What I ultimately discovered was a man who possessed simply all of the right characteristics, strategies, and the ideal mind set to succeed in the market over the long-term.

It is a tragedy that Irwin is no longer around to share and help investors around the world with his contrarian perspectives. This post is dedicated to Irwin’s memory and, to honor him, I would like to share some of the many lessons I learned in the sincere hope that it may benefit you as well.

Lessons From Irwin T. Yamamoto

  • Be a consistent contrarian:  Being contrarian was Irwin’s nature. Whenever possible he took the unpopular view and found ways to make money from it. While some people love to think they are a contrarian as far as the market is concerned, when the heat is on and everyone (including the market itself) thinks you are dead wrong, they always run back to the herd. Irwin never did. Not once. No matter what. And, trust me, he was tested many times throughout his career.
  • Have courage:  Every call Irwin made was a bold call. If it wasn’t bold, he simply didn’t make it. He refused to hedge his bets by trying to take the middle road or offering up so many contradicting opinions so he could later say he was right no matter what happened as so many experts do. To do well in the market, we all have to have the courage to make and stick with our convictions. Often the investment decisions that will work out the best are the ones that simply require the most courage to make.
  • Believe in yourself:  Irwin had an unshakable belief in himself. That’s so very important when you have your hard-earned money in the market. Through thick and thin, Irwin always expected to win and he did more than most. Every winner I’ve met has possessed this important characteristic. However, what made Irwin truly special was that he also had the humility to keep his confidence in check.
  • Focus on quality not quantity:  Irwin told me often that he was a happy man if he could just have one good opportunity in the market every year. Yes, that’s right – just one opportunity. In fact, subscribers to his newsletter will testify to the fact that Irwin rarely had more than just a handful of positions on at any given time and was not afraid to be in cash for extremely long periods when he found no excellent opportunities to share.
  • Patience:  When taking the unpopular and contrarian view, Irwin understood that time was on his side. Although he would admit that it was “not easy to be alone in the crowd and swim continuously against the tide,” by maintaining a long-term perspective, Irwin was not tempted by the seduction of the short-term market swings. His focus was instead to concentrate on the big picture trends and profiting from them.
  • Ignore short-term noise:  Irwin had the ability to ignore the short-term noise and concentrate on what really matters over the long haul. Yamamoto believed that the real-time coverage of the markets were severely detrimental to investors and he refused to watch the market during the day. Irwin told me that he would stay up late enough (Hawaiian time) to watch the premarket futures and premarket headlines, but then would go to bed once the market opened no matter what was going on. By doing this, the daily ups and downs didn’t phase him which is why he was able to be so consistent in his approach. In a day and age where everything is coming at us fast and in real-time, this was Yamamoto’s edge and he used it well.
  • Let your track record speak for itself:  There’s a lot of puffery out there in the investment world as people try to sell newsletters, tips, advice and tools on the backs of people’s hopes and fears. Irwin never did. He simply did his job, produced the best results he could, and let the cards fall where they may. In both good times and bad, he never sought out public exposure or engaged in aggressive marketing techniques that is so very common today. Yamamoto was successful because he simply produced excellent results. He didn’t waste time creating hype or seeking attention by telling others how right he has been in the past. Instead his focus was on finding the next opportunity. Always.
  • Be in control of your destiny:  Irwin understood both his strengths and weaknesses and created a business model that he loved. He started his newsletter back in 1977, found a format he liked (a typed newsletter usually no greater than a couple of pages sent out once per month) and he stuck with it all of those years. Although he was under pressure by his subscribers to make more frequent updates, go online, etc., he never did because he saw it as overkill and unhelpful to his clients. Say what you want, his outperformance among his peers over a long period of time shows he was ultimately right.
  • Know yourself:  Irwin’s strategy was reflective of who he was and took advantage of his unique skills and personality. Irwin didn’t use indicators, sophisticated timing strategies or mess around with investments he didn’t know much about. Rest assure he never even considered daytrading stocks or adopting strategies of others that didn’t match his own personality. He knew who he was and aligned his strategy accordingly.
  • Be happy:  The market and the performance of his investments never impacted his mood. In fact, some of the happiest conversations I had with Yamamoto was when he should have been the most frustrated and disappointed in his recent performance. When times were bad, he simply kept doing what he always had been doing and refused to let the market get the upper hand over his emotions. A skill many of us so desperately need.
  • Keep learning:  Yamamoto was always in a learning mode and displayed a child-like enthusiasm for learning new things. It was my impression based on our conversations that he never felt like he knew everything or that there wasn’t so much more to learn. He was an avid reader and spent the vast majority of his free time reading and, more importantly, thinking about the market. Like many great students, Irwin sought out the ideas from people who he disagreed with the most so that he could “know his enemy.”
  • Think like a businessman:  He told me often that he viewed himself as a businessman. A successful one “simply looks to purchase wholesale and sell retail.” His goal was to know the worth of a company and then acquire it below its true value. After finding an interesting opportunity, he would then scour the balance sheet and read all of the footnotes focusing primarily on the company’s cash position and relative cash flow. If those things looked good, he was especially encouraged if he saw insider buying. A simple, but effective strategy. To my knowledge, Irwin had only one stock screen in his toolbox – the new 52-week low list.
  • Play make believe:  Irwin was insistent that most people shouldn’t be in the market until after they acquired the skills and strategies to consistently succeed. He often urged people to play “make believe” by mentally selecting a few stocks and tracking them for some time to see how they react to news and events. Only after doing that for long periods of time and after showing success should a person ever be in the market with their own money.
  • Don’t lose your values:  We would often talk about how subscribers often wanted us to sway bullish or bearish, especially at the sentiment extremes. Like offering short sells after a major correction or buys after a rally, versus the exact opposite and how that often was the wrong approach. Irwin would often lose subscribers because of it, but he didn’t care. He stayed true to his own views through thick or thin even if it cost him money and lost subscription revenue.

In the end, it was a true honor to have Irwin Yamamoto as dear and loyal friend and so much wish he was still around so that we could discuss and debate the issues and opportunities that face the markets today!





Todd Mitchell’s 20 Rules for Trading Success

20 09 2011

1.0 Always use stops. Risk control is the true measure of a good consistent trader. If you lose all your capital on the lemons, you can’t play when the great trades set up. Consider cash as having an option value.

2.0 Don’t over trade. This is the number one reason why individual traders and investors lose money. Look at your trades of the past year and apply the 90/10 rule. Dump the least profitable 90% and watch your performance skyrocket. Then aim for that 10%. Over trading is a great early retirement plan for your broker, not you.

3.0 Don’t forget to sell. Date, don’t marry your positions. Remember, pigs get slaughtered. Always leave the last 10%-15% of a move for the next guy.

4.0 Don’t chase the market. If you do, it will turn back and bite you. Wait for it to come to you. If your miss the train, there will be another one along in hours, days, weeks, or months. Patience is truly a virtue in this business.

5.0 When I put on a position, I calculate how much I am willing to lose to keep it. I then put a stop just below there. If I get triggered, I just walk away. Only enter a trade when the risk/ reward is in your favor. You can start at 2:1. That means only risk a dollar to potentially make two.

6.0 Always be willing to go Long (Buy) and Short (Sell). You have to be flexible and dynamic in your trading…one minute I could be long the market and the very next minute I may be short the market. You need to be able to flip flop and be quick and nimble in your trading.

7.0 You don’t have to be a genius to play this came. If that was required, Wall Street would have run out of players a long time ago. If you employ risk control and stops, then you can be wrong 40% of the time, and still make a living. That’s little better than a coin toss. If you’re wrong only 30% of the time, you can make millions. If you’re wrong only 20% of the time, you are heading a trading desk at Goldman Sachs. If you’re wrong a mere 10% of the time, you’re running a $20 billion hedge fund that the public only hears about when you pay/invest $100 million. And if someone tells you they’re never wrong, as is often claimed on the Internet, run a mile, because it’s simply impossible!

8.0 Trading is hard work. Trading attracts a lot of wide eyed, naïve, but lazy people because it appears so easy from the outside. You buy a stock (futures contract, forex, option, etf, etc.), watch it go up, and make money. How hard is that? The reality is that successful trading and or investing requires twice as much work as a normal job. The more research you put into a trade, the more comfortable you will become, and the more profitable it will be.

9.0 Don’t confuse a bull market with brilliance. When the market goes straight up (i.e. 1995 to 2000) anybody and their grandmother can make money.

10.0 John Maynard Keynes, the great economist and early hedge fund trader of the thirties, once said: “Markets can remain illogical longer than you can remain solvent.” Hang around long enough, and you will see this proven time and time again.

11.0 Don’t believe the media. Look for the hard data, the numbers, and you’ll see that often the talking heads, the paid industry apologists, and politicians don’t know what they’re talking about.

12.0 Sometimes the conventional wisdom is right.

13.0 INVEST like a fundamentalist, execute like a technical analyst. (Swing) TRADE using technical analysis…then by understanding basic fundamentals will make you even better.

14.0 Technical analysis…knowing how to read charts like a daily newspaper is key to successful trading. That said, learn what an “outside vertical bar” is, and who the hell is Leonardo Fibonacci.

15.0 The simpler a market approach, the better it works (the ‘KISS’ method). Everyone talks about “buy low and sell high”, but few actually do it. All black boxes eventually blow up, if they were ever there in the first place.

16.0 Markets are made up of people. Understand and anticipate how traders think, and you will make a lot of money. The market is made up of peoples fear and greed…it’s all psychological…learn how to read people and you’ll certainly be ahead of everybody else.

17.0 Understand what information is in the market and what isn’t and you will make more money.

18.0 Do the hard trade, the one that everyone tells you that you are “Crazy” to do. If you add a position and then throw up or feel sick afterwards, then you know you’ve done the right thing.

19.0 If you are trying to get out of a hole, the first thing to do is quit digging and throw away the shovel – exit your trade asap. A blank/neutral/flat position can be invigorating.

20.0 Making money in the market is an unnatural act. We humans are predators and hunters evolved to track game on the horizon of an African savanna. Modern humans are maybe 5 million years old, but civilization has been around for only 10,000 years. Our brains have not had time to make the adjustment. In the market, this means that if a stock has gone up, you believe it will continue. This is why market tops and bottoms see volume spikes. To make money, you have to go against these innate instincts. Some people are born with this ability, while others can only learn it through decades of training.

http://tradingconceptsinc.com/todd-mitchells-20-rules-trading-success/





38 Steps to becoming a Succesful Trader

2 09 2011

They are as follows:

1. We accumulate information – buying books, going to seminars and researching.

2. We begin to trade with our ‘new’ knowledge.

3. We consistently ‘donate’ and then realise we may need more knowledge or information.

4. We accumulate more information.

5. We switch the positions we are currently following.

6. We go back into the market and trade with our ‘updated’ knowledge.

7. We get ‘beat up’ again and begin to lose some of our confidence. Fear starts setting in.

8. We start to listen to ‘outside news’ and to other traders.

9. We go back into the market and continue to ‘donate’.

10. We switch positions again.

11. We search for more information.

12. We go back into the market and start to see a little progress.

13. We get ‘over-confident’ and the market humbles us.

14. We start to understand that trading successfully is going to take more time and more knowledge than we anticipated.

MOST PEOPLE WILL GIVE UP AT THIS POINT, AS THEY REALISE SERIOUS WORK IS INVOLVED.

15. We get serious and start concentrating on learning a ‘real’ methodology.

16. We trade our methodology with some success, but realise that something is missing.

17. We begin to understand the need for having rules to apply our methodology.

18. We take a sabbatical from trading to develop and research our trading rules.

19. We start trading again, this time with rules and find some success, but over all we still hesitate when we execute.

20. We add, subtract and modify rules as we see a need to be more proficient with our rules.

21. We feel we are very close to crossing that threshold of successful trading.

22. We start to take responsibility for our trading results as we understand that our success is in us, not the methodology.

23. We continue to trade and become more proficient with our methodology and our rules.

24. As we trade we still have a tendency to violate our rules and our results are still erratic.

25. We know we are close.

26. We go back and research our rules.

27. We build the confidence in our rules and go back into the market and trade.

28. Our trading results are getting better, but we are still hesitating in executing our rules.

29. We now see the importance of following our rules as we see the results of our trades when we don’t follow the rules.

30. We begin to see that our lack of success is within us (a lack of discipline in following the rules because of some kind of fear) and we begin to work on knowing ourselves better.

31. We continue to trade and the market teaches us more and more about ourselves.

32. We master our methodology and our trading rules.

33. We begin to consistently make money.

34. We get a little over-confident and the market humbles us… yet again!

35. We continue to learn our lessons.

36. We stop thinking and allow our rules to trade for us (trading becomes boring, but successful) and our trading account continues to grow as we increase our capital base.

37. We are making more money than we ever dreamed possible.

38. We go on with our lives and accomplish many of the goals we had always dreamed of.

Most traders will identify with this list and should be able to place themselves within these steps. Keep in mind that very few people progress through these steps in an orderly fashion. Developing your trading skills is an iterative process. For example, you may reach Step 13., find that although you were making money, your basic premise for trading was flawed  (you might have been benefiting from the bull market, rather than your own trading prowess and then have been rudely awakened when the market entered a bear phase) and you may drop back to Step 4. and start ‘climbing’ the steps again. Having the proper mindset, attitude and psychological makeup becomes increasingly important as you progress through the steps. The focus of the earlier steps is on external issues, i.e. developing proficiency in the mechanics of trading while the focus of the latter steps (particularly from Step 30, on) is on internal issues, i.e.  improving ourselves mentally and psychologically, maturing as traders.                              





Time Tested Classic Trading Rules for the Modern Trader to Follow

20 08 2011

Time Tested Classic Trading Rules for the Modern Trader to Follow
http://www.traderslog.com/trading-rules.htm

By Linda Bradford Raschke

This is a list of classic trading rules that was given to me while on the trading floor in 1984. A senior trader collected these rules from classic trading literature throughout the twentieth century. They obviously withstand the age-old test of time.

I’m sure most everybody knows these truisms in their hearts, but this list is nicely edited and makes a good read.

1. Plan your trades. Trade your plan.
2. Keep records of your trading results.
3. Keep a positive attitude, no matter how much you lose.
4. Don’t take the market home.
5. Continually set higher trading goals.
6. Successful traders buy into bad news and sell into good news.
7. Successful traders are not afraid to buy high and sell low.
8. Successful traders have a well-scheduled planned time for studying the markets.
9. Successful traders isolate themselves from the opinions of others.
10. Continually strive for patience, perseverance, determination, and rational action.
11. Limit your losses – use stops!
12. Never cancel a stop loss order after you have placed it!
13. Place the stop at the time you make your trade.
14. Never get into the market because you are anxious because of waiting.
15. Avoid getting in or out of the market too often.
16. Losses make the trader studious – not profits. Take advantage of every loss to improve your knowledge of market action.
17. The most difficult task in speculation is not prediction but self-control. Successful trading is difficult and frustrating. You are the most important element in the equation for success.
18. Always discipline yourself by following a pre-determined set of rules.
19. Remember that a bear market will give back in one month what a bull market has taken three months to build.
20. Don’t ever allow a big winning trade to turn into a loser. Stop yourself out if the market moves against you 20% from your peak profit point.
21. You must have a program, you must know your program, and you must follow your program.
22. Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more than likely will be profitable.
23. Split your profits right down the middle and never risk more than 50% of them again in the market.
24. The key to successful trading is knowing yourself and your stress point.
25. The difference between winners and losers isn’t so much native ability as it is discipline exercised in avoiding mistakes.
26. In trading as in fencing there are the quick and the dead.
27. Speech may be silver but silence is golden. Traders with the golden touch do not talk about their success.
28. Dream big dreams and think tall. Very few people set goals too high. A man becomes what he thinks about all day long.
29. Accept failure as a step towards victory.
30. Have you taken a loss? Forget it quickly. Have you taken a profit? Forget it even quicker! Don’t let ego and greed inhibit clear thinking and hard work.
31. One cannot do anything about yesterday. When one door closes, another door opens. The greater opportunity always lies through the open door.
32. The deepest secret for the trader is to subordinate his will to the will of the market. The market is truth as it reflects all forces that bear upon it. As long as he recognizes this he is safe. When he ignores this, he is lost and doomed.
33. It’s much easier to put on a trade than to take it off.
34. If a market doesn’t do what you think it should do, get out.
35. Beware of large positions that can control your emotions. Don’t be overly aggressive with the market. Treat it gently by allowing your equity to grow steadily rather than in bursts.
36. Never add to a losing position.
37. Beware of trying to pick tops or bottoms.
38. You must believe in yourself and your judgement if you expect to make a living at this game.
39. In a narrow market there is no sense in trying to anticipate what the next big movement is going to be – up or down.
40. A loss never bothers me after I take it. I forget it overnight. But being wrong and not taking the loss – that is what does the damage to the pocket book and to the soul.
41. Never volunteer advice and never brag of your winnings.
42. Of all speculative blunders, there are few greater than selling what shows a profit and keeping what shows a loss.
43. Standing aside is a position.
44. It is better to be more interested in the market’s reaction to new information than in the piece of news itself.
45. If you don’t know who you are, the markets are an expensive place to find out.
46. In the world of money, which is a world shaped by human behavior, nobody has the foggiest notion of what will happen in the future. Mark that word – Nobody! Thus the successful trader does not base moves on what supposedly will happen but reacts instead to what does happen.
47. Except in unusual circumstances, get in the habit of taking your profit too soon. Don’t torment yourself if a trade continues winning without you. Chances are it won’t continue long. If it does, console yourself by thinking of all the times when liquidating early reserved gains that you would have otherwise lost.
48. When the ship starts to sink, don’t pray – jump!
49. Lose your opinion – not your money.
50. Assimilate into your very bones a set of trading rules that works for you.