If you wish to be a successful futures or options investor, you must learn to control your losses. No talent that you develop as a trader will ever be as important to you as this. The formula for success in futures and options trading is: X (AP) – Y (AL) = SUCCESS OR FAILURE (X) is the number of profits that you have. (AP) is your average profit per trade. (Y) is the number of losses that you have. (AL) is your average loss per trade. You multiply the number of profits you have times the average of your profits to arrive at your total profits. You multiply the number of losses that you have times the average of your losses to arrive at your total losses. X (AP) equals total profits. Y (AL) equals total losses. Total profits minus total losses equals success or failure. Of this formula, the two most important letters to you are (AL). Why is the (AL) so important in your effort to achieve success. It is important because (AL) is the only element of this formula that you can control. Think about it for a while and you will see what I mean.
Archives of “Education” category
rssRambo teaches trading
Because we are shaped by our environment, it is important to remember that the longer we spend in the company of the market, so our perception of the market (eg: as an ecosystem, a battlefield, an unequal competition between players, a fight, etc) becomes important in defining us around the edges.
Sarah Miller: You know you never told us your name.
John Rambo: John.
Sarah Miller: Lived here a long time?
John Rambo: Long Time.
He who would fight monsters must take care not to become one. – Nieztsche
Patience is a virtue
Patience is a virtue, and no place does this truism hold more water than the stock market. When a trader allows doubt, a facet of fear, to inform his trading decision, he sets himself up for failure. The market does not care about the wants of an individual trader, whereas when making a turn across oncoming traffic, a mistake may result only in an oncoming driver slamming on his or her brakes in order to avoid an accident. The market will not extend such a courtesy. It will run over anyone and anything between it and where it is going without as much as an afterthought. It is the responsibility, not of the market to go where the trader wants it to go, but for the trader to determine the most likely course of the market and plan accordingly. Patience, achieved by a trader monitoring his internal dialogue, makes it possible.
He who is not courageous enough to take risks will accomplish nothing in life.
Mesmerizing Video of Crowd Control at a Comic Convention in Japan
TRADING IS WAR. PREPARE YOUR WEAPONS
SUN TZU gives a very clear and succinct reason for his military treatise in the first three sentences when he says,
“The art of war is of vital importance to the state. It is a matter of life and death, a road to either safety or ruin. Hence it is the subject of inquiry which can on no account be neglected.”
Here is my interpretation for traders:
“The art of trading is of vital importance to the success of the trader. It is a matter of financial life and death, a road to either consistent profits or significant loss of income. Hence it requires much thoughtful study that cannot be neglected.”
SUN TZU and THE ART OF WAR THE TRADER and THE ART OF TRADING
| Important to the State | Important to the trader |
| A matter of life and death | A matter of financial life or death |
| Road to safety/ruin | A road to consistent profits/significant losses |
| Subject of inquiry not to be neglected | Subject of thoughtful study not to be neglected |
As we continue to explore SUN TZU’s ART OF WAR, keep the above table in mind for everything that follows in his treatise will be shaped by SUN TZU’s foundational premise, which is this: since war is a given fact whoever engages in it best be prepared because the warrior’s very survival is at stake.
Trading is war. If you have been trading long enough I do not have to convince you that it is so. Thoughtful study of the market and how we relate to it is the key to our success and our very survival.
Blue Channels -Art of Manipulation by Analysts
Always Remember :Bigger the Company……………………..bigger the Manipulation (No force can catch them )
-Extreme level of Insider Trading ,Data Leak ,From Company to Management to Analysts to Blue channels :Everybody is involved.
Yes ………………………..If Facts comes out it will be a disaster !!!
Details
Details matter, but try to see the forest for the trees. Don’t let the gigantic river of news, opinions, rumours influence your beliefs, plans and strategies.
Marty Schwartz Quotes
Marty has scored enormous percentage gains in every year since he turned full time trader in 1979, but he has done so without ever losing more than 3 percent of his equity on a month-end to month-end basis. In the US Investing Championships held by Stanford University Professor Norm Zadeh, his performance was nothing short of astounding. In nine of the ten four-month championships he entered, he made more money than all the other traders combined. His average return in these nine contests was 210 percent – non annualized! In his single entry in a one-year contest, he scored a 781 percent return.
“I turned from a loser to a winner when I was able to separate my ego needs from making money. When I was able to accept being wrong. Before that, admitting I was wrong was more upsetting than losing the money.”
”When I became a winner I went from ‘I figured it out, therefore it can’t be wrong’ to ‘I figured it out, but if I’m wrong, I’m getting the hell out, because I want to save my money and go on to the next trade.”
”By living the philosophy that my winners are always in front of me, it is not so painful to take a loss. If I make a mistake, so what! “
”Before taking a position always know the amount you are willing to lose.”
”The most important thing is money management, money management, money management. Anybody who is successful will tell you the same thing.”
”I always take my losses quickly. That is probably the key to my success.”
”The best advice I can give to the ordinary guy trying to become a better trader is Learn to take losses. The most important thing in making money is not letting your losses get out of hand.
Jim Rogers on Priorities and Focus
- If you ask a thousand people if they want to be rich, every one except the poet and the mystic will say yes. When you explain what is needed to become rich, maybe six hundred of that initial 998 will say, “No problem, I can do that.” But when push comes to shove, when they have to sacrifice everything else in their lives – having a spouse and a children, a social life, possibly a spiritual life, maybe even pleasure – to meet their goal, almost all of them, too, will fall away. Only about six of the original thousand will continue on the hard path.
- Most of us don’t have the discipline to stay focused on a single goal for five, ten, or twenty years, giving up everything to bring it off, but that’s what’s necessary to become an Olympic champion, a world class surgeon, or a Kirov ballerina. Even then, of course, it may be all in vain. You may make a single mistake that wipes out all the work. It may ruin the sweet, lovable self you were at seventeen.
- That old adage is true: You can do anything in life, you just can’t do everything. That’s what [Francis] Bacon meant when he said a wife and children were hostages to fortune. If you put them first, you probably won’t run the three-and-a-half-minute-mile, make your first $10 million, write the great American novel, or go around the world on a motorcycle. Such goals take complete dedication.