Hockey Stick Forecast For Traders -Investors
Archives of “February 2019” month
rss21 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…)
Jesse Livermore’s Speculative Chart
Trade the strategy you know. Familiarity is a wonderful thing.
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…)
The mindset of a successful trader
More 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.