A great excerpt from “Trading Rules: Strategies for Success” by William Eng. It’s a great reminder that market prediction is a fool’s errand:
When you buy something, you want it to go up. When you sell something, you want it to go down. The chance of entering the trade correctly is small, but the chance of exiting the trade correctly is smaller. The chance of being right on both entering and exiting is the smallest. With such diminishing odds of coming through with a completely correct and, therefore, profitable trading campaign, the fewer decisions you make in the markets, the more profitable your trading should be. How many people actually get to sell at the top or buy at the bottom? At most, a handful in each reversal area. First, you must be a market follower, once the market has told you want it wants to do. If the market is a raging bull, you have no alternative but to buy. If it is bearish, you have no alternative but to sell every time you get the opportunity. Let the market tell you what to do. To do otherwise is to try to control the markets-something that is only reserved for God and natural disasters. Secondly, selling at the top and buying at the bottom does not guarantee profits. How many times have you heard of traders who managed to sell near the highs or buy near the bottoms, only to miss the ensuing move completely.
Tο whatever degree уου haven’t accepted tһе risk, іѕ tһе same degree tο wһісһ уου wіƖƖ avoid tһе risk. Trying tο avoid something tһаt іѕ unavoidable wіƖƖ һаνе disastrous effects οח уουr ability tο trade successfully.
Of course there is always a reason for fluctuations, but the tape does not concern itself with the why and wherefore.
My plan of trading was sound enough and won oftener than it lost. If I had stuck to it I’d have been right perhaps as often as seven out of ten times.
What beat me was not having brains enough to stick to my own game.
But there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily or sufficient knowledge to make his. play an intelligent play.
The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages.
It takes a man a long time to learn all the lessons of all his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side. It took me longer to get that general principle fixed firmly in my mind than it did most of the more technical phases of the game of stock speculation.
My losses have taught me that I must not begin to advance until I am sure I shall not have to retreat. But if I cannot advance I do not move at all. I do not mean by this that a man should not limit his losses when he is wrong. He should. But that should not breed indecision.
I was still ignoring general principles; and as long as I did that I could not spot the exact trouble with my game. (more…)
Spain has successfully got away the sale of EUR3.9bln benchmark bonds this morning. Target amount was EUR3-4bln – bid/cover ratio 2.1
Updated at 14:30/10th June/Baroda
“Without freedom there is no trading. Trading is a celebration of economic and political freedom. Slaves are traded; they do not trade. All this freedom, however, is for naught if we, ourselves, are not free. It is the deepest of ironies that we experience greater freedom–far broader potentials–than those who came before us. And yet, in our lives, in our abilities to master ourselves, we are no freer.
Amid opportunity, we remain partial: tethered to our conditioning. What it means to be free is to be able to choose, to live with intention.
The free life is one that we guide: a life lived with purpose, direction, and meaning. Trading, like all the great performance activities, is an opportunity to cultivate the intentional life. Pursued properly, it is a path to freedom.”