Approach the market like a robot. Emotionless and effective!”
Understand your maximum loss
Understand it’s OK to take a loss
Don’t become emotionally attached to your trades
Take adequate position sizes
Be in total control
Your psychological mindset is one of the most important ingredients to your success in the market.
Be disciplined and you will put yourself ahead of the majority of other traders/investors.
There are however, significant question marks over Jesse Livermore’s trading record. He bankrupted himself more than once during his career. Then, having made one of the biggest inflation adjusted stock-market coups in history shorting the markets in 1929, he had lost it all by 1934.
Reasonable observers – for the sake of argument I shall include myself in this group – would not try to claim that Livermore was a flawless trader. Livermore is, however, remembered, while most of his trading contemporaries are long forgotten.
Livermore’s continuing fame arises from several significant factors:
Despite the question marks over his career, even today a trader can make money in the markets using Livermore’s methods. More recent trading gurus – such as Martin Zweig and Alexander Elder – owe a debt to Jesse Livermore for the methods they either use or publicize. There is no other figure in the history of the markets whose methods continue to figure so strongly in market trading than Jesse Livermore’s.
Trading Psychology 2.0 is based on four major themes: Adapting to changing markets; Building strengths; Cultivating creativity; and Developing best practices and processes. Here are fifteen interesting quotes from the book:
1. Discipline, while necessary for success, is never sufficient. Discipline does not substitute for skill, talent, and insight. Strict, disciplined adherence to mediocre plans can only lock in mediocre results. If it were otherwise, there would be no losing automated trading systems.
2. It is not enough to find an “edge” in financial markets; as any tech entrepreneur can attest, competitive advantages are perishable commodities. Those who sustain success continually renew themselves, uncovering fresh sources of competitive advantage. That requires processes for assessing and challenging our most basic assumptions and practices. It takes a good trader to create success, a great one to recreate it. Nothing is quite as difficult— and rewarding— as letting go of what once worked, returning to the humble status of student, and arising phoenix-like from performance ashes.
3. This productivity is readily apparent on a day-to-day, week-to-week basis: The greats simply get more done than their colleagues. They organize their time and prioritize their activities so that they are both efficient (get a lot done per unit of time) and effective (get the right things done). How much time do we typically waste as traders, staring unthinkingly at screens, chatting with people who offer little insight, and reading low-priority/ information-poor emails and reports? The successful traders invariably are workhorses, not showhorses: They get their hands dirty rooting through data and make active use of well-cultivated information networks.
4. Successful traders I’ve known work as hard on themselves as on markets. They develop routines for keeping themselves in ideal states for making trading decisions, often by optimizing their lives outside of markets. (more…)
And you even paid attention!
// 0) {obj0.innerHTML=s.substr(0,r);obj1.innerHTML=s.substr(r+16);}
// ]]>
Do everything you can to survive your learning curve and to ensure that you can support yourself financially (and emotionally) through your learning curve. Trade in simulation mode before you put money at risk, trade one lots before you trade larger size. Make your mistakes when your exposure is lowest. If you can break even after trading costs/expenses, you’re doing very well. Don’t push the curve or you’ll find yourself deep in a hole.
1) Enter a trade that doesn’t take off – cut it. I don’t care if it takes off after that.
2) Get a gut feeling that I’m on the wrong side of the market – cut it and reverse.
3) Stopped out twice on the same pair – stay flat and don’t trade until tomorrow. (more…)
