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20 Principles That Make Market Wizards Successful

  • They have the resilience to come back from early losses and account blow ups.
  • They focus on what really matters in trading success.
  • They have developed a trading method that fits their own personality.
  • They trade with an edge.
  • The harder they work at trading the luckier they get.
  • They do the homework to develop a methodology through researching ideas.
  • The principles they use in their trading models are simple.
  • They have mental and emotional control is key while winning or losing.
  • They manage the risk to avoid failure and pain.
  • They have the discipline to follow their trading plan.
  • Market wizards have confidence and independence in themselves as traders
  • They are patient with winning trades and impatient with losing trades.
  • Emotions are dangerous masters to the trader; they know how to manage their own emotions.
  • Market wizards evolve as a trader to avoid eventually failing in a method that has lost its edge over time.
  • It is not the news but how the market reacts to that news is what they watch for.
  • The fully understand the right way to position size for their goals of returns and drawdowns based on their risk/reward and winning percentage.
  • Market wizards understand comfortable trades are usually losing trades while the more uncomfortable trades are usually the winners.
  • They are good losers. Cutting losses when proven wrong and even reversing the direction of their trades when the price action dictates it.
  • The best traders are always learning through their own mistakes.
  • Passion for trading was the fuel for their eventual success.

Think More, React Less

Yesteraday finally watched Inception over the weekend and found it to be the most enjoyable movie so far of the summer. Of course, that’s not saying much as we continue to despise much of the garbage coming out of Hollywood these days, but we both found the movie fascinating.

One of the things in the movie that got me to thinking is the concept that when we sleep our minds keep working through problems at a higher level in order find and create solutions. I don’t know about you, but I immediately identified with this. In fact it caused me to remember something I use to do many years ago while in college  but haven’t been doing lately due to my early-morning “up at 5″ work schedule. That is, whenever I ran into a difficult impasse in my research and work, I would often spend the last 30 minutes before bed simply thinking and studying the problem I was facing. Then after going to bed while I was asleep my mind would continue working on it so that when I would awake the next morning I’d have a new angle or approach to work on.

While the process didn’t always work and sometimes resulted in an unrestful night’s sleep as I tossed and turned throughout the night, by taking time out of my day to think about a problem without distractions before bed at times did enable me to find creative solutions that seemed to work more often than not. Although I’ve done the same thing for years through daily meditation (20 minutes each and every day), I must confess I think there is something to the process of preparing your mind to work on problems while you sleep and completely free from distractions, especially if you’re faced with a particularly cumbersome or complicated challenge.

Many of you are probably not surprised to hear me say that I think time spent to concentrated thought without any distractions is something I think many traders lack these days. As all of us continued to be constantly bombarded with real-time information, I think many have become far more reactionary than “thought” driven. At some level that is ok for some strategies (like day trading for example), but it wreaks havoc on others.

It has also been my experience through working one-on-one with members in the mentorship group that most are not devoting enough “think time” in their daily routines. In my experience, the average person only takes less than 5 minutes a day (if that) to actually think through their trades, strategies, and plans. That’s not enough! Not by a long shot!

For that reason alone, mixing up your routine to enable your mind to think without distractions while you sleep may be at least something you’ll want to try. While I know from experience that I always receive dubious feedback whenever I recommend utilizing meditation and breathing techniques to help clear the mind, boost productivity, and overall performance, you may want to at least try mixing up your work schedule a little bit in order to gear and ramp up your mental state more effectively. In addition, if you’re not devoting some time every day (at least 30 minutes) free from all distractions to think about your strategies, positions, and performance, then I truly believe you are not really giving yourself the best chance for success.

The more the world speeds up and becomes even more reactionary, the more important I think it will be for those of us engaged in the markets to think more and react less.

Trading Wisdom

 

What I say to the youngling…
Pray for the best, plan for the worst and go about our everyday business

“It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower.” – William O’Neil

“When asked if there was a technique for making money on the stock exchange, Nathan Rothschild said, “There certainly is. I never buy at the bottom and I always sell too soon.” – William O’Neil

“Only a fool holds out for the top dollars,” said Joe Kennedy, one-time wall street speculator and the father of former President John F. Kennedy. The object is to get out while a stock is up, before it has a chance to break. Gerald M. Loeb states, ” Once the price has risen into estimated normal or overvaluation areas, the amount held should be reduced steadily as quotation advance.” (At this point it’s all right to ask yourself, “Why didn’t I sell when it was going up and looked so strong?”)” — William O’Neil

“Another thing to bear in mind is this: Never try to sell at the top. It isn’t wise. Sell after a reaction if there is no rally.” – Jesse Livermore

The Largest Employers in the World

You might be surprised to learn what the largest employer in the world is. Want to take a guess? It is the Chinese Army, also known as the Peoples Liberation Army, at 2.3 million employees. WalMart (WMT) is in second place with 2.1 million employees, then the Indian Railway at 1.4 million, and the National Health Service in the United Kingdom at 1.33 million.

In fifth place is China Petroleum & Chemical Corporation (SNP) also known as Sinopec Corp. with 639,690 employees. Then there is G4S, a private security company in England in sixth place at 585,000 employees. Seventh is PetroChina (PTR), China’s biggest oil producer which trades on the NYSE, with 539,168 employees.

Deutsche Post (DPSGY.PK), is another publicly traded big employer. This mail and package delivery company has 436,650 employees. The engineering conglomerate Siemens (SI), also publicly traded and trades on the New York Stock Exchange, has 420,800 employees. Last but not least, McDonalds (MCD), the fast food company, has around 400,000 employees.

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