You shouldn't try so hard to be perfect; Perfect should try to be you.
Archives of “Education” category
rssA Trader’s 5 Best Teachers
Trading Losses: There are two types of losses, one loss is caused by the market simply not being conducive for the profitability of your system. The other loss is due to your lack of discipline causing your system not to work. If you followed your trading plan and had a loss that is to be expected. If you are trading a proven and tested method then you have simply learned that taking a loss is simply part of trading. However if your breach of discipline caused your loss, whether not taking a stop, over riding your plan, not taking an entry, trading too big, etc. then it is time to learn why you had the loss. Ego? Fear? Greed? Overconfidence? Laziness? and many other things cause losses. It is crucial that you learn why you broke your trading plan so you do not repeat the mistake again.
Charts: Studying the past price action of charts is very educational. It will show you how prices have reacted at support/resistance levels in the past along with moving averages and any other indicators that you may choose. It is important that you understand how your market has historically traded whether it is currencies, commodities, stocks, or bonds. It is crucial that you learn how to identify a trend, a swing trade, and a range bound market. (more…)
FOUR STEPS TO TRADING PROGRESS
HEAR
To HEAR you have to listen and listen intentionally. You will not HEAR properly if you are focused on other things. This situation is especially true on a webinar or during the trading day when the markets are open. It is essential to set distractions aside and HEAR what is being stated.
RECEIVE
To RECEIVE something you have to HEAR it and come into agreement with it. To RECEIVE is to take it unto yourself and personally grab hold of what you have heard and make it your own.
BELIEVE
To be successful you have to believe that what you HEAR and RECEIVE can add value to your current situation. You have to BELIEVE that a specific strategy repeated and correctly executed, regards of any specific outcome, will provide successful results over time. You will act on what you believe In all areas of life. Please make sure you really do BELIEVE it and are not allowing any contradictory mindset to compete with your belief because it is possible to hold two opposing beliefs at once. This is being double minded and leads to instability. Being firm and unswayed in what you BELIEVE can lead to becoming a successful trader. (more…)
Awesome! Double tap if you agree!!
Trading Mantra By Benjamin Graham
Live Your Own Life
A lot of us tend to live our lives based on other’s choices, and not our own. You may have even experienced this yourself. Sometimes, other people feel as if they know what’s best for you. I know I have experienced this, particularly regarding my occupation. “Oh, you are probably going to end up being a Kindergarten teacher”, “You would be a great gym teacher”, “Have you thought about joining law enforcement?” As the days go by, all the suggestions are being piled up. I don’t pay attention to them, because I know where my heart wants to be.
Live your own life, and not how others want you to live it. Let them worry about their own lives. You know, deep down, in your heart, what you want to do, and when you want to do it. You’re the only one who knows what’s best for you.
The money and man-hours spent on worthless work product is obscene. Berkshire letter, 1999:
Loss Aversion
There’s a short Danny Kahneman interview at the Daily Beast here. He notes why your best friends may not be your best advisors:
Friends are sometimes a big help when they share your feelings. In the context of decisions, the friends who will serve you best are those who understand your feelings but are not overly impressed by them.
That’s the Kahneman I love to read, profound and interesting. But then he follows with this sentence:
For example, one important source of bad decisions is loss aversion, by which we put far more weight on what we may lose than on what we may gain. (more…)
Jason Zweig’s Rules for Investing
1. Take the Global View: Use a spreadsheet to track your total net worth — not day-to-day price fluctuations.
2. Hope for the best, but expect the worst: Brace for disaster via diversification and learning market history. Expect good investments to do poorly from time to time. Don’t allow temporary under-performance or disaster to cause you to panic.
3. Investigate, then invest: Study companies’ financial statement, mutual funds’ prospectus, and advisors’ background. Do your homework!
4. Never say always: Never put more than 10% of your net worth into any one investment.
5. Know what you don’t know: Don’t believe you know everything. Look across different time periods; ask what might make an investment go down.
6. The past is not prologue: Investors buy low sell high! They don’t buy something merely because it is trending higher.
7. Weigh what they say: Ask any forecaster for their complete track record of predictions. Before deploying a strategy, gather objective evidence of its performance.
8. If it sounds too good to be true, it probably is: High Return + Low Risk + Short Time = Fraud.
9. Costs are killers: Trading costs can equal 1%; Mutual fund fees are another 1-2%; If middlemen take 3-5% of your cash, its a huge drag on returns.
10. Eggs go splat: Never put all your eggs in one basket; diversify across U.S., Foreign stocks, bonds and cash. Never fill your 401(k) with employee company stock.
The Success cycle
