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50 One Liners for Traders

  
Analysis, Education
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  1. Don’t try to read into other people’s trading decisions.
  2. By all means like a stock, but don’t try to be best friends with it forever. Instead, spend time nurturing positions that are being kind to you.
  3. Beware the Beginners Cycle. The want to be right will cause you to collect courses and books and will only be a costly and frustrating exercise. The secret is elsewhere.
  4. Actually, there is no secret. It’s all in the maths.
  5. Losses when trading are inevitable, but losses should always be limited.
  6. Have a prepared trading plan so you don’t rush into bad decisions. Time spent planning will help you avoid catastrophic losses, riding the emotional roller coaster, and other unnecessary headaches.
  7. Get off your high horse. Your ego will eventually cost you dearly.
  8. Validate your strategy before you risk your capital.
  9. Don’t waste your time on other trader’s successes. The only person you’re competing against is yourself.
  10. 10. Ignore any broker that tells you to buy when there is blood in the streets. You can be sure it’s not theirs.
  11. Outsource to people who do the stuff they’re better at so you can do the stuff you’re better at.
  12. Make haste slowly. Ensure you have a validated strategy that has an edge and ensure you have a full understanding of the journey ahead of you. The markets will always be there. What won’t be there if you’re in too much of a hurry is the capital in your account.
  13. Understand positive expectancy. When you see it, you’ll get it.
  14. Ask someone you trust if you are unsure.
  15. Risk a small amount of capital on each trade.
  16. Sentiment will drive the market, or a stock, a lot further than logic ever will.
  17. Only fools claim to know the future.
  18. Don’t be a dick for a tick. Saving a few cents here and there will only cost you dollars later on.
  19. You can’t control the market. Don’t waste your time by watching every trade tick along.
  20. Find a strategy that makes sense to you.
  21. Be curious and keep a trading diary. Don’t be scared to learn something new.
  22. Explore new ideas and opportunities often.
  23. Let go of things you can’t change. Concentrate on things you can.
  24. There is no point questioning the market.
  25. The market will pay you when it’s ready. You just need to be there when it does.
  26. Find a strategy you actually enjoy following.
  27. Realize that the harder you work, the luckier you will become.
  28. Risk not thy whole wad. There is a reason why compounding is the 8th Wonder of the World.
  29. However good or bad a situation is now, it will change. Accept that positive expectancy sometimes takes time to show its hand.
  30. Realize that being right does not equate to profits.
  31. 45% of trades will tend be profitable. 45% will tend be losses. 10% will be breakeven. Your job is to make the winners count.
  32. Make mistakes, learn from them, laugh about them, and move along.
  33. Successful trading is not a sprint. Buffet didn’t earn his reputation in a single year – or decade.
  34. The only thing you can control is the amount of money you’re willing to lose on each trade.
  35. Don’t over think things. Simple works best. Complex will eventually break.
  36. Understand why your strategy makes money.
  37. If you can’t pull the trigger it’s usually because you don’t trust the strategy you’re using. Stop and re-evaluate.
  38. Trends can’t not exist.
  39. The biggest hurdle to overcome is between your ears.
  40. Don’t fear the market. It can’t actually hurt you. You can hurt you though.
  41. The object of gaining a trading education isn’t knowledge; it’s to enable action.
  42. Never move a stop backward. You’re mind is screwing with you.
  43. Rules you can’t or won’t follow are of no use to you.
  44. Your initial reaction to any adverse situation is usually wrong.
  45. Risk and volatility are not the same. Volatility can increase returns. Risk can increase losses.
  46. Think long term with regard to strategy application. Performance and trade outcomes in the short term are random.
  47. The keys to success are consistency, discipline and patience. They cannot be bought.
  48. Every stock that goes bankrupt exhibits a sustained downtrend first.
  49. Any strategy is only as good as the person using it.
  50. Take responsibility for every decision you make.

3 New Trading Rules

  
  Education
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-THE MORE STUBBORN YOU ARE, THE MORE YOU WILL LOSE.  THE STOCK MARKET IS ALWAYS RIGHT.

-DON’T CHASE STOCKS JUST TO DO A TRADE.  AVOID BOREDOM TRADES.  IF NO TRADE IS THERE, PASS, AND SOMETIMES DON’T TRADE ANY STOCKS AT ALL.

-TRY TO GET IN BEFORE THE HEADLINES INSTEAD OF BUYING THE HEADLINES.   Market homework absolutely required to be a success.

What Traders Can Control & What They Can't

  
  Education
We can control:
How much we risk per trade.
How big a position size we take.
What time frame we trade.
What market we trade.
Our style of trading.
Whether we stick with our trading plan or go off of it.
If we honor our stop losses and trailing stops.
How we react to a winning or losing trade.

 We can not control:

Whip saws when the trend reverses on us.
Gaps in opening prices both up and down.
Headline risk.
Natural disasters.
Whether a trend continues or reverses the moment we open a position.
Whether any individual trade wins or loses.
How many winning or losing trades we have in a row.

49 Trading Rules for Traders

  
  Education
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  1. Usually they liquidate the good trades and keep the bad ones. Many traders don’t realize the news they hear and read has, in many cases, already been discounted by the market.
  2. After several profitable trades, many speculators become wild and unconservative. They base their trades on hunches and long shots, rather than sound fundamental and technical reasoning, or put their money into one deal that “can’t fail.”
  3. Traders often try to carry too big a position with too little capital, and trade too frequently for the size of the account.
  4. Some traders try to “beat the market” by day-trading, nervous scalping, and getting greedy.
  5. They fail to pre-define risk, add to a losing position, and fail to use stops.
  6. They frequently have a directional bias; for example, always wanting to be long.
  7. Lack of experience in the market causes many traders to become emotionally and/or financially committed to one trade, and unwilling or unable to take a loss. They may be unable to admit they have made a mistake, or they look at the market in too short a timeframe.
  8. They overtrade.
  9. Many traders can’t (or don’t) take the small losses. They often stick with a loser until it really hurts, then take the loss. This is an undisciplined approach…a trader needs to develop and stick with a system.
  10. Many traders get a fundamental case and hang onto it, even after the market technically turns. Only believe fundamentals as long as the technical signals follow. Both must agree.
  11. Many traders break a cardinal rule: “Cut losses short. Let profits run.”
  12. Many people trade with their hearts instead of their heads. For some traders, adversity (or success) distorts judgment. That’s why they should have a plan first, and stick to it.
  13. Often traders have bad timing, and not enough capital to survive the shake out.
  14. Too many traders perceive futures markets as an intuitive arena. The inability to distinguish between price fluctuations which reflect a fundamental change and those which represent an interim change often causes losses.
  15. Not following a disciplined trading program leads to accepting large losses and small profits. Many traders do not define offensive and defensive plans when an initial position is taken.
  16. Emotion makes many traders hold a loser too long. Many traders don’t discipline themselves to take small losses and big gains.
  17. Too many traders are underfinanced, and get washed out at the extremes.
  18. Greed causes some traders to allow profits to dwindle into losses while hoping for larger profits. This is really lack of discipline. Also, having too many trades on at one time and overtrading for the amount of capital involved can stem from greed.
  19. Trying to trade inactive markets is dangerous.
  20. Taking too big a risk with too little profit potential is a sure way to losses. (more…)

5 Quotes From Market Wizard Steve Clark

  
  Education
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I was so inexperienced that I didn’t have the fear – the fear that cripples people who have been in the business too long. I have seen that so many times. Very few people maintain their ability to take risk throughout their career. Most don’t Most can’t. They have had too many bad things happen to them, too many fat tails, and it damages people – Steve Clark

What Clark is talking about here sounds like the opposite of beginner’s luck. I have seen a number of examples of this in the business world. People who work their whole lives to build something by taking risks suddenly don’t want to take risks anymore. They realize at some point that they now have things that they are no longer willing to lose. They have too much experience watching others fail.

It was a terrible shock to me ego. I began to doubt my ability. It was a very depressing time. It lasted for several months. I’ve seen this happen to many traders, and I have gone through it sever times myself. When you find that you can’t make any money, smaller and smaller losses take on greater and greater emotional significance, and you lose all perspective. – Steve Clark

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