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10 Lessons
1. Markets tend to return to the mean over time.
2. Excesses in one direction will lead to an opposite excess in the other direction.
3. There are no new eras – excesses are never permanent.
4. Exponential rising and falling markets usually go further than you think.
5. The public buys the most at the top and the least at the bottom.
6. Fear and greed are stronger than long-term resolve.
7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chips.
8. Bear markets have three stages.
9. When all the experts and forecasts agree – something else is going to happen.
10. Bull markets are more fun than bear markets.
Trading Psychology
“Just shoot every third person on Wall Street and everything will be fine.” -Bill Clinton
-tive interest rates reaching Consumer finance in Germany
For Ongoing Phase…
There is no trading – classroom or otherwise – that can prepare for trading the last third of a move, whether is the end of a bull market or the end of a bear market. There is typically no logic to it; irrationality reigns supreme, and no class can teach what to do during that brief volatile time. The only way to learn how to trade during that last third of a move is to do it, more precisely, live it.
All bubbles tend to reach extremes not expected by most people.
Market can remain irrational longer than you can remain solvent.
You can go broke by being right. Have an entry and exit strategy.
Practice. Focus. Discipline
5 Quotes for Traders
- Poor trading practice, poor execution, poor risk management and poor trade management, is responsible for much emotional distress. Trading affects our psychology as much as psychology affects our trading.
- Identify your greatest fears and face them as directly as possible, so that you find out they are not as powerful as they seemed.”
- We are all afraid of things and this is a good solution to over coming our fears, because our fears are never as bad as they seem. We make them out to be horrible, but when we finally face our fears we discover that they aren’t so bad.
- Getting rid of our fears one by one, will make us a stronger people and will allow us to strengthen others.
- Thinking positively or negatively about performance outcomes will interfere with process of performing. When you focus on the doing, the outcomes take care of themselves.
VICTORY
