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Quotes on Psychology

The most important single factor in shaping security markets is public psychology. – Gerald Loeb

Wall Street never changes. The pockets change, the suckers change, the stocks change, but Wall Street never changes because human nature never changes. – Jesse Livermore

There is nothing more important than your emotional balance. – Jesse Livermore

There are styles in securities as there are in clothes. A security may be undervalued, but if it is also out of style it is of little interest to the speculator. He is, therefore, compelled to study the psychology of the stock market as well as the elements of real value. – Phil Carret

When events have thinking participants, the subject matter is no longer confined to facts but also includes the participants’ perceptions.  The chain of causation does not lead directly from fact to fact but from fact to perception and from perception to fact. – George Soros

How independent minded are you?

Winning traders go their own way. They don’t follow the crowd. They are independent minded. How independent minded are you? Here’s a short 10-item quiz to help you determine your tendency to think independently.

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  1. Do you feel uneasy when you think that others don’t like you?
  2. Do you care what others think?
  3. While growing up, did you do what was expected of you?
  4. When making important decisions, do you seek out the opinions of others? (more…)

Discipline in Trading

Discipline is important, especially in volatile markets.  Discipline is not something that you are born with it is something that has to be learned.  Think about a family member or even yourself, are you discipline and they are not or vice versa?  This has nothing to do with DNA.  You either want it or you don’t.  Or in my case, I was forced to have it.

Discipline is like any other habit, you have to build it.  If you don’t use it you lose it.

When a client is having trouble with discipline I ask them why they are trading.  There are three response:  It is fun/exciting, to make money, and the challenge.  If they’re main goal is doing it for fun and excitement than discipline is not required but I explain to them that it will prolong their fun.  If they’re doing it for money than it is necessary to survive the lean times. Discipline makes it possible to learn and adapt.  If you are doing it for the challenge I always go back to the time factor.  If it is worth doing than it is worth doing well.  I equate lack of discipline to wasting their talents and time.

The problem with discipline is that when you need it most it is the furthest thing from your mind.  Discipline doesn’t matter, getting your money back or profits is usually all that can fit into an untrained mind.

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