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Nassim Taleb's Six Rules For Succeeding In Life

TalebSuccess in all endeavors is requires absence of specific qualities.
1) To succeed in crime requires absence of empathy,
2) To succeed in banking you need absense of shame at hiding risks,
3) To succeed in school requires absence of common sense,
4) To succeed in economics requires absence of understanding of probability, risk, or 2nd order effects and about anything,
5) To succeed in journalism requires inability to think about matters that have an infinitesimal small chance of being relevant next January, 
…6) But to succeed in life requires a total inability to do anything that makes you uncomfortable when you look at yourself in the mirror.

21 Trading Rules of Jesse Livermore’s Written in 1940

1. Nothing new ever occurs in the business of speculating or investing in securities and commodities.

2. Money cannot consistently be made trading every day or every week during the year.

3. Don’t trust your own opinion and back your judgment until the action of the market itself confirms your opinion.

4. Markets are never wrong – opinions often are.

5. The real money made in speculating has been in commitments showing in profit right from the start.

6. As long as a stock is acting right, and the market is right, do not be in a hurry to take profits.

7. One should never permit speculative ventures to run into investments. (more…)

Anything Can Happen

I have a mini-mantra that I tell myself when I place a trade.  “You never know what’s just around the corner – anything can happen.”

This statement allows me to recognise that my trade might be a loser, but it could also be the trade of a lifetime.  So many times when I was testing my method I came across a trade that I was hesitant to enter, only to have it rip through resistance and go on to be an outrageous winner.  It confirmed to me that my opinion means nothing, and anything can happen. Not only can anything happen, we need to be prepared for anything to happen.

That means we need to be equally as prepared for a winner as a loser, both in our trading system and also in our head.

If you are equally prepared for your trade to be a winner as you are for it to be a loser, you’re one step closer to having a more healthy balance to your trading.

If you’re having trouble pulling the trigger because you’re terrified of losing any more money, implementing these things can help.  But it’s not instant – it’s an ongoing process to achieving a healthier, more balanced way of thinking.

The Market Is Never Wrong In What It Does

“The market is never wrong in what it does; it just is. Therefore, you as an individual trader interacting with the market—first as an observer to perceive opportunity, then as a participant executing a trade, contributing to the overall market behavior—have to confront an environment where only you can be wrong, and it’s never the other way around. As a trader, you have to decide what is more important—being right or making money—because the two are not always compatible or consistent with one another.”

Mark Douglas, in The Disciplined Trader

Maxims of Baltasar Gracian

Baltasar Gracian (1601-1658) wrote many popular maxims:

33. Know when to put something aside– One of life’s great lessons lies in knowing how to refuse, and it is even more important to refuse yourself, both to business and to others…it is worse to busy yourself with the trivial than to do nothing…All excess is a vice, especially in your dealings with others.

51. Know how to choose– Most things in life depend on it. You need good taste and an upright judgment; intelligence and application are not enough…Two talents are involved: choosing and choosing the best.

89. Know yourself-– The key to everything.

104. Have a good sense of what each job requires-– “Far better are the jobs we don’t grow bored with, where variety combines with importance and refreshes our taste.”

110. Don’t wait to be a setting sun. Similar: Quit while you’re ahead; don’t wear out your welcome

121. Don’t make much ado about nothing-– “Few bothersome things are important enough to bother with…Many things that were something are nothing if left alone, and others that were nothing turn into much because we pay attention to them.” Similar: Take it easy.

139. Know your unlucky days – “On some days, everything goes badly; on others, well, and with less effort…Take advantage of such days, and don’t waste a moment of them.” (more…)