- At the very top tier, the investors he’s interviewed don’t want to manage clients’ money and deal with client predilections, dramas and desires. They have clients only until they can afford not to.
- The best traders are focused on varying bet sizes based on their calculations and the individual equities’ probability of success. They bet more on positions that have a strong wind at their backs.
- If there is bad news or adverse results with respect to their equity and if the market shakes it off and barely moves down, these managers will add to their positions because they know that the market is telling them something valuable.
- In the long run, it’s not the genius of investment ideas that produce consistent profits. Trade implementation and execution is more important and will usually trump big ideas.
- All your trades fall into one of 4 baskets. Keep track and make the necessary adjustments. (a) Winning trades where you properly followed your disciplines – the best choice. (b) Winning trades where you did not follow your disciplines. (c) Losing trades where you followed your disciplines – okay. (d) Losing trades where you did not follow your disciplines.
- Most individual investors place stops or sell positions based on how much pain they can endure. Professional money managers place stops based on proof, not pain. Where should the market not go? If it does, it’s telling them they are wrong. Since they have to stop being wrong, they sell.
- The mindset of an exceptional trader has the ability to change from bullish to bearish – or vice versa – in a minute. Mental flexibility is essential, provided you are then able to react appropriately with that new mindset.
- Investing is unique. You can’t turn around a losing trade by trying harder. If you hit a slump, take some time off and come back slowly.
- When historically-correlated markets stop being correlated, you can bet on a return to normalcy or a regression to the historical mean.
- Never let your targets and your goals define your trades. Leave that to the markets and be flexible.
- If you ever feel as if you are frozen in a particular equity position, take 50% of the position and sell it. If you are still uncomfortable, sell the other half.