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61 Thoughts on Strategy

1. Always change a losing game; never change a winning game.

2. Always have a plan going into a match, and a backup plan.

3. Always have a surprise to pull out all the stops.

4. Reconnoiter your opponent before the match for his strengths and weaknesses.

5. Have a general strategy against all power players, and another against all control players.

6. Analyze every match – how would you play it differently next time.

7. Keep a log of your strategies, and of the opponents.

8. Always have a customized strategy against each opponent, if possible.

9. Call a timeout whenever you skip two straight shots, or the opponent runs three straight points.

10. Keep a coach in the crowd for a second opinion. (more…)

Ultimate Goal For All Traders

In my opinion, this is the ultimate goal for all traders: Get to the point where you can make confident decisions on your own and trade with complete independence. While I tremendously respect the opinion of my colleagues, I DO NOT rely on them. I can turn off Blue Channels, and all communication to the outside world…and still be fine with making my own decisions and letting THE MARKET tell me if I’m right or wrong. I apologize if this sounds cocky, but it’s simply the truth.

How do you get to this point? Make decisions and learn from them! I openly admit that I have made TONS of mistakes in the market, and I still make mistakes EVERY DAY. The key is I’ve learned from them and now try my best to minimize those mistakes. As Tony Robbins says: “Good decisions come from experience, and experience comes from bad decisions.” The key is to MAKE a decision without worrying that you might be wrong. As long as you learn from it, you can correct it the next time. Again, just make the decision! Who knows, it might end up being a good one 

Winning Streaks vs. Losing Streaks

All traders who last long enough will go through periods of winning and losing streaks.Mathematicians refer to the process as the theory or run known to gamblers as a “streak.”Games of chance  such as roulette ,craps and blackjack are predicated that the house has an edge over the player.Trading  has  a distinct advantage because the trader has the ability to be the house.A mathematical edge is all that is all that is needed by the trader to increase his probability of success.Sound money management advantage begins to work.What happiness in real time trading is that after a series of losing trades the trader will begin to question the system or his ability to execute the system properly.

Tow things are necessary to get though the bad losing times !Belief in your system is very important but it ranks second to the sound money management system.Mediocre trading systems can have positive results with the use of a good money management system.The rule of thumb is to reduce your risk on any trade to 2% of working capital.This should prevent a meltdown but remember trading is about probability not certainty !

15 Fundamentals To Win Stock Market Battle

Gerald Loeb was a founding partner of E.F. Hutton, a renowned and successful Wall Street trader, and the author of the books The Battle For Investment Survival and The Battle For Stock Market Profits.

Mr. Loeb promoted a contrarian view of the market as too risky to hold stocks for the long term in direct contrast to many of his generation. At the time, many considered Loeb’s comments heresy to the buy and hold doctrine so common among many in the industry. While Loeb never had the opportunity to trade in an environment now ruled by quants, algorithmic trading and massive government intervention, his wisdom and insight is still applicable in today’s environment. After all, the more things change, the more they always stay the same!

Based on his two books, here are 15 fundamentals Loeb argues that you need to understand to win the battle not only against yourself, but also against the market:

  1. What everyone else knows is not worth knowing.
  2. Stocks are always way overvalued in a bull market and way undervalued in a bear market.
  3. The best stocks will always seem overpriced to the majority of investors.
  4. Expectation, not the news itself, is what moves the market.
  5. Three basis elements should be considered when evaluating a stock – 1) quality (fundamentals, liquidity, management), 2) price, and 3) trend (the most important).
  6. Stocks act like human beings and go through the same stages and phases as people do, including infancy, growth, maturity, and decline. The key in trading is to be able to recognize which stage the stock is in and to take advantage of that opportunity.
  7. Pyramid your buys – start with an initial position and then add to it only if the trade moves in your favor.
  8. The more experienced and successful you become, the less you should diversify.
  9. Traders must always resist the urge and temptation to change their strategies for each and every different market cycle.
  10. To succeed in trading you must 1) aim high, 2) control the risks, 3) be unafraid to keep uninvested reserves and 4) be patient.
  11. Successful traders are intelligent, they understand human psychology, they practice pure objectivity, and they have natural quickness.
  12. You must always trade with the actions of the market and not simply by how you might think the market should trade.
  13. Knowledge through experience is one trait that separates successful stock market speculators from everyone else.
  14. The stock market is more an art than a science and far more complex than most people understand.
  15. Always sell when you start patting yourself on the back for being smarter than the market. (more…)