The mindset of a successful trader
Archives of “February 6, 2019” day
rssMore Sellers than Buyers
“The real story of the rescue. Save the euro, must save the euro. All the world’s central banks rush to save a fiat currency. If the euro should collapse, it would demonstrate the inherent vulnerability of a leading fiat currency. The central banks and the IMF have put up nearly one trillion dollars to bail out Greece, but more important, to show the world that fiat currencies are “safe” and here to stay. Remember, the business and power of central banks lies in their fiat, non-intrinsic money – money they can create at will). To hell with Greece, the euro, therefore, at all costs, MUST be saved. In all my market years, I’ve never seen such consternation and disbelief in market action, and I’m referring to last week’s crash. Headlined the Los Angeles Times on Saturday, “Stocks’ Plunge a Troubling Mystery.” From the NY Times on Saturday, “Origin of Scare on Wall Street Eludes Officials.” Front page of Barron’s — “Don’t Let Europe’s Problems Fool You. The Bull Market Will Regain His Footing.” The Saturday Wall Street Journal even viewed the crash as a God-given opportunity with a big black-letter headline, “Playing the Market Plunge.” Wall Street and the public are so all-fired bullish that they are calling the crash a mistake, a computer error, or even the stock market losing its mind. Nobody, it appears, accepted the crash at face value. I find the cynical reaction to the crash rather ominous. I’d call it total disbelief in the market. Behind the disbelief are the unspoken words, “The economy is good, Corporate earnings are improving dramatically. Therefore, the stock market must be advancing. The crash was a terrible mistake. The stock market has lost its mind. Buy the mistake, it’s a great opportunity.” A radio station called me and asked what caused the crash. I answered, “Four words — More sellers than buyers.” The interviewer seemed stunned. He paused for about 10 seconds and asked, “You mean that’s it?” I answered, “Right, when sellers overwhelm buyers in a big way, guess what? The market goes down in a big
Risk -Greed
Worry is not a sickness but a sign of health. If you are not worried, you are not risking enough.
Put your money at risk. Don’t be afraid to get hurt a little. The degree of risk you will usually be dealing with is not hair-raisingly high. By being willing to face it, you give yourself the only realistic chance you have of rising above the great unrich. Worry is the hot and tart sauce of life. Once you get used to it, you enjoy it.
Always play for meaningful stakes
Resist the allure of diversification
( Because it forces you to violate precept minor axiom 1 )
( Because it creates situation where gains and losses cancel each other out.
( Because you end up with too many balls in the air )
Always take your profit too soon.
Sell too soon. Don’t hope for winning streaks to go on and on. Don’t stretch your luck. Expect winning streaks to be short. When you reach a previously decided-upon ending position, cash out and walk away. Do this even when everything looks rosy, when everyone else is saying the boom will keep roaring along.
The ONLY reason for not doing it would be that some new situation has arisen, and this situation makes you all but certain that you can go on winning for a while.
Except in such usual circumstances, get in the habit of selling too soon. And when you’ve sold, don’t torment yourself if the winning continues without you.
Decide in advance what gain you want from a venture, and when you get it, get out.
Risking -Trading is all about Risk Control !
The Following Excerpt is from one of my favorite audiotapes ,’Risking ‘by David Viscount.I keep this on my desk to remind me each day to keep ‘Risking ‘.Only a person who risks is truly free.
Where Is Your Head When You're Trading?
Where is your head during the market day?
Are you looking through the rear-view mirror, criticizing your last trade?
Are you looking at your profit/loss for the day and filtering trades through that?
Are you distracted by people or the phone?
Are you thinking about yourself and how well or poorly you’ve been doing?
Are you locked in an opinion of what the market “should” be doing instead of observing what it *is* doing? (more…)
Is Economics Research Replicable? “Usually Not”
When do human minds peak?
TRY THIS……
Financial Documentaries
Below are a few documentaries that are a must watch if you haven’t already seen them. If you have, watch them again.
Trading Wisdom – Jesse Livermore
Many books have been written by and about Mr. Livermore. He was a fascinating individual who reportedly made $100 million in a single day in the 1929 crash.
Legend has it that during the crash J.P. Morgan personally walked over to the N.Y. Stock exchange to ask Jesse Livermore to stop selling and start buying in order to save the markets.
He was an expert at following the right trend, with the exception of marriage. His wife was married about four times prior to marrying him, and all four husbands killed themselves, as did Jesse eventually. Not quite marriage counselor material, he is nonetheless one of the greatest wells of trading wisdom from which I have quenched my thirst in the past.
I am a much better trader because of Jesse Livermore. Every time I get stuck in a trading rut, I review my notes on his trading philosophies, which I would like to share with you below. (more…)