Market Wizard’s 25 Trading Clichés and Axioms to Follow, Memorize and Practice

  1. THE MARKET ITSELF IS THE ULTIMATE WEILDER OF JUSTICE. JUDGE, JURY AND PROSECUTOR.
  2. RECIPE TO LOSE FOR SURE: OVER-ANALYZE, PROCRASTINATE, HESITATE.
  3. LEARN TO SWEAT OUT, HANG ON TO AND SCALE OUT OF YOUR WINNERS.
  4. HIT SINGLES AND DOUBLES, NOT HOMERUNS. THE HOMERUNS ARE USUALLY THE RESULT OF GOOD TRADING AFTER A PROFITABLE TRADE HAS STARTED TO MAKE ITS MOVE
  5. A BIG LOSS CAN DESTROY YOU. IS RISK WORTH TOTAL DESTRUCTION?
  6. LOVE TO LOSE MONEY. NOT BECAUSE YOU’RE AN IDIOT, BUT BECAUSE LOSING MONEY IS AN IMMEDIATE FEEDBACK MECHANISM. EMBRACE THE SIGNAL AND DITCH THE TRADE.
  7. NEWS IS HISTORY. THIS IS THE MOST IMPORTANT AND LEAST OBSERVED RULE. DAYTRADING ARCADES UP AND DOWN WALL STREET HAVE DOZENS AND DOZENS OF LCD’S TUNED TO ONE STATION, CNBC. BY THE TIME THEY PUKE IT OUT, IT’S ABOUT 7 TO 12 HOURS OLD. THERE IS NO SUCH THING AS “BREAKING NEWS” ANYMORE. SOME TRADERS TELL ME THEY TUNE IT OUT. YOU CAN’T. IT GETS INTO YOUR SUBCONSCIOUS AND AFFECTS YOUR TRADING. PUT YOURSELF ON A TOTAL NEWS BLACKOUT FOR A WHILE AND SEE WHAT HAPPENS TO YOUR RESULTS. LOSE TOUCH WITH THE REST OF THE WORLD. ISOLATE YOURSELF TO YOUR ALGORITHMS, DATA, CHARTS AND MASTERING YOUR TRADING PLATFORM. AND IF YOU WORK FOR A FIRM WITH DOZENS OF LCD’S TUNED TO CNBC, MAINLY SO THAT THEIR “GUY” WHO IS ON ONCE A WEEK IS SEEN AND HEARD BY EVERYONE AT THE FIRM. THIS PERSON RARELY KNOWS HOW TO TRADE. I KNOW OF A FEW FIRMS OUT THERE LIKE THIS.
  8. THE FIRST LOSS IS THE BEST LOSS BECAUSE IT HURTS THE MOST. LEARNING TO LOSE IS IMPORTANT. LEARNING TO LOSE AS LITTLE AS POSSIBLE IS THE MARKET’S PAVLOVIAN WAY OF TEACHING YOU HOW TO TRADE PROFESSIONALLY AND PROFITABLY
  9. EARN THE RIGHT TO TRADE BIGGER. YOU’LL KNOW WHEN YOU’RE READY. DON’T RUSH IT. THE BIGGER YOU GET, THE MORE IMPORTANT EXECUTION STRATEGY BECOMES. YOU DON’T WANT TO BE SLOPPY, LIKE MOST PEOPLE I’VE MET, EVEN THOSE THAT WERE SO CALLED MENTORS TO ME, OR WHO I CALLED “MAESTRO”. SLOPPIEST TRADER IN THE WORLD. TINY ORDERS LEAVING ELEPHANT FOOTPRINTS WHILE SMART TRADERS TAKE MAMMOTH ORDERS AND DON’T MAKE A RIPPLE
  10. BE YOURSELF. DON’T TRY TO BE SOMEONE ELSE. FIND THE STRATEGY THAT WORKS FOR YOUR PSYCHE. IT TAKES WORK, READING, TESTING, AND INNER-REFLECTION. YOUR CHARACTER HAS THE CORRECT STRATEGY OUT THERE. YOU HAVE TO FIND IT. DON’T TRADE WHAT SOME SCHMUCK WANNABE HEAD TRADER AT A SHADY FIRM TELLS YOU TO TRADE, OR USE A STRATEGY TAUGHT BY A FIRM THAT LETS YOU ONLY TRADE THAT STRATEGY. GET OUT OF THESE FIRMS.
  11. YOUR BIGGEST LOSER CAN’T EXCEED YOUR BIGGEST WINNER OBVIOUSLY. BUT THAT’S AT ALL LEVELS, TIME FRAMES, SCALES, AND SIZES.
  12. ALWAYS LOWER YOUR TRADE SIZE WHEN YOU’RE TRADING POORLY AND KEEP LOWERING IT UNTIL YOU’RE DOWN TO 100 SHARES AND STAY THERE UNTIL A FEW PROFITABLE 100 SHARE TRADES IN A ROW THEN START DOUBLING YOUR TRADE SIZE: 200, 400, 800, 1600, ETC…
  13. THE MARKET PAYS YOU TO BE DISCIPLINED AND USES MONEY FROM THE UNDISCIPLINED
  14. BE DISCIPLINED EVERY DAY, IN EVERY TRADE, AND THE MARKET WILL REWARD YOU. YOU HAVE TO BE DISCPLINED AT ALL TIMES, NOT JUST WHEN YOU’RE DOWN OR BARELY UP FOR THE DAY, EVEN WHEN YOU’RE UP YOUR BIGGEST DAY OF THE YEAR, YOU HAVE TO MAINTAIN DISCIPLINE. THAT NUMBER IS JUST A SCORE.
  15. NEVER TURN A WINNER INTO A LOSER BECAUSE YOU’LL LIKELY LET IT KEEP MOVING AGAINST YOU MORE THAN YOU WOULD A TRADE THAT STARTED OUT AS A LOSER.
  16. DEVELOP A METHODOLOGY AND STICK WITH IT. DON’T CHANGE METHODOLOGIES FROM DAY TO DAY. HAVE SEVERAL METHODOLOGIES TO EMPLOY DEPENDING ON YOUR TAKE OF MARKET CONDITIONS, AND EMPLOY THAT ONE. MACRO CONDITIONS DON’T CHANGE OVERNIGHT. IF THE MARKET MAKES A SUDDEN MOVE AGAINST THE MACRO BACKDROP ON THE OPEN OR CLOSE, DON’T BE AFRAID TO FADE THE MOVE. IT TAKES A LONG TIME TO TURN A MACRO TREND.
  17. YOU ALWAYS WANT TO BE ABLE TO COME BACK AND WORK THE NEXT DAY. DON’T LOSE YOUR JOB BY MAKING A HORRIBLE TRADE INTO A STUPID ONE.
  18. GET THE HELL OUT OF YOUR LOSERS. GET THE HELL OUT OF YOUR LOSERS.
  19. DON’T HOPE AND PRAY. IF YOU DO, YOU WILL LOSE. IFYOU WANNA PRAY, GO TO CHURCH, IF YOU WANNA HOPE, GO TO VEGAS. IF YOU WANNA WORK, THEN LEARN TO UNDERSTAND MARKETS, MASTER YOUR PLATFORMS EXECUTION CAPABILITIES AND FINE TUNE YOUR STRATEGIES BY WRITING THEM DOWN.
  20. DON’T SPECULATE. IF YOU DO, YOU WILL BE PUNISHED BY THE PRODUCTIVITY GODS. SPECULATION DOESN’T ADD TO ANYTHING. NO ONE WINS WHEN YOU SPECULATE. CAPITALISM IS ALL ABOUT SMART INVESTMENTS.
  21. IF YOUR TRADE IS NOT GOING ANYWHERE IN A GIVEN TIMEFRAME, IT’S TIME TO EXIT. YOU’RE BURNING MONEY IN CARRY FEES, LOST OPPORTUNITIES, AND THE PROPENSITY TO END UP MARRYING A POSITION
  22. MAKE A LITTLE BIT EVERYDAY. DIG YOUR DITCHES BUT DON’T FILL THEM IN WITH YOURSELF. KEEP EM SHALLOW SO YOU CAN CRAWL OUT.
  23. CONSISTENCY BUILDS CONFIDENCE AND CONTROL. CONTROL GIVES YOU THE ZONE YOU NEED TO BE IN TO MAKE A MARKET IN THE STOCK YOU’RE TRADING. YOU WANT TO BE THE AX ON THE DAYS YOUR BUILDING AND CLOSING YOUR TRADE.
  24. MAKE THE SAME TRADE OVER AND OVER AGAIN – BE A MASON. FIND WHAT WORKS AND STAY WITH IT.
  25. ALL TRADERS ARE CREATED EQUAL IN THE EYES OF THE MARKET. IN THE EYES OF TRADERS, ALL TRADERS ARE NOT CREATED EQUAL AND MARKETS ARE PERCEIVED DIFFERENTLY. THAT’S THE GREATEST PART ABOUT BEING A TRADER.