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Truth and Trading

  
  Education
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Recently I’ve been listening to The Teaching Company CD’s while I work out. I was particularly intrigued by a discussion of Meditations by Marcus Aurelius, a Roman Emperor who had always wanted instead to be a philosopher. His philosophy could be summarized in this way: Get out of bed, do your duty, and appreciate things along the way. Not bad.

He believed in certain absolute values for living, and chose the values of Socrates which are truth, justice, courage, moderation, and wisdom.

Asking myself how these values impact trading I came up with some new insights. But first let’s look at how Marcus Aurelius defined these values. Professor J Rufus Fears, who teaches the course on “Books That Have Made History: Books That Can Change Your Life” explained it the following way:

1. Truth: Truth is an absolute value. Some things are true in all places and times. Resisting evil, for example, is always right.

2. Justice: Justice consists of treating others as one would wish to be treated. “Do unto others as you would have them do unto you” summarizes this concept of justice.

3. Courage: Courage means standing up for justice.

4. Moderation: Nothing should be carried to excess.

5. Wisdom: Wisdom enables a person to know what justice is, to recognize when courage is required, and to do what is right.

So how do these values play out in our trading? In this column, let’s explore truth as it applies to your trading. (more…)

Ten Trading Affirmations

  
  Education
I accept the present as reality and take action accordingly.

 I take what the markets give me and am grateful for these gifts.

I am willing to make mistakes, learn from them, forgive myself and move on.

I am flexible and adaptable.

I can easily and truthfully say “I don’t know”

I trust myself to do what is in my best interest.

The Market is my best teacher.

I learn something new everyday.

I am becoming a better trader.

5 Trading Psychology Quotes

  
  Education
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“To succeed as a trader, it is absolutely necessary to have an edge.  You can’t win without an edge, even with the world’s greatest discipline and money management skills.  If you don’t have an edge, all that money management and discipline will do for you is to guarantee that you will gradually bleed to death.  Incidentally, if you don’t know what your edge is, you don’t have one.” Jack Schwager 

“Environmental distractions and boredom cause a lack of focus – All of us have limits to our attention span and these are easily taxed during quiet times in the market.”  Brett Steenbarger

“If there is such a thing as a secret to the nature of trading, this is it: At the very core of one’s ability 1) to trade without fear or overconfidence, 2) perceive what the market is offering from its perspective, 3) stay completely focused in the ‘now moment opportunity flow,’ and 4) spontaneously enter the ‘zone,’ it is a strong virtually unshakeable belief in an uncertain outcome with an edge in your favor.” Mark Douglas

“The ‘making money’ part of trading is simply a by-product (end result) of a focused and precise utilization of our trained psychological and mechanical resources to successfully find and manage trades. Under the most intense circumstances, the best results will be produced only with a deep concentration and focus on the task at hand.” Chris Lori

“The ability to subordinate an impulse to a value is the essence of the proactive person.  Reactive people are driven by feelings, by circumstances, by conditions, by their environment.  Proactive people are driven by values – carefully thought about, selected and internalized values.” Stephen Covey 

Psychology & Risk Management -This Way U Can Mint Money

  
  Education

PSYCHOLOGY

  1. I keep Blue Channels turned off while trading.
  2. I do not care about others opinions I care only about price and chart action.
  3. I do not try to predict, instead I trade in accordance with the chart.
  4. I am not trying to prove I am right I am trying to make money.
  5. I am not trading for ego gratification I am trading for money.
  6. I am not trying to be the genius who calls a top I am the trend follower who follows a trend all the way up until it ends.
  7. I admit freely to my losing trades along with my winning trades.
  8. I do not get emotionally attached to each price movement through out the day.
  9. I have faith in my rules, methodology and system.
  10. I understand it that it is the market conditions and not me that creates profits.

RISK MANAGEMENT

  1. I never add to a losing positions.
  2. I carefully control position sizing to limit risk based on volatility.
  3. I attempt to never lose  more than 1% of my capital on any one trade.
  4. I trade smaller when volatility is high.
  5. I sell positions with volatility stops when daily ranges double in the wrong direction.
  6. I have stale stops and sale positions that do not trend in four days after entry.
  7. I quickly sell losing trades when my stop is hit.
  8. I sell stocks when they close in the bottom of the days range.
  9. I never expose more than 6% of my capital to possible loss at any one time.
  10. Risk is priority #1, profits are #2.
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