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Take A Punch

  
  Education
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“Everyone has a plan ’til they get punched in the mouth.”

That’s one of the central challenges of trading. We set out with plans, then we get punched in the mouth with adverse movement.

—One way to think of risk management is as a framework that allows you to be aggressive enough to occasionally get hit in the mouth, but not so wild that you’ll get knocked out. Learning how to take a punch is key to boxing success, and it’s also an important trading skill.

5 Quotes From Market Wizard Dr. Van. K. Tharp

  
  Education

“The composite profile of a losing trader would be someone who is highly stressed and has little protection from stress, has a negative outlook on life and expects the worst, has a lot of conflict in his/her personality, and blames others when things go wrong. Such a person would not have a set of rules to guide their behavior and would be more likely a crowd follower. In addition, losing traders tend to be disorganized and impatient.”

I’ll bet you know someone like this. I know a lot of people like this. Over time, I have learned that these types of people are toxic to my thought process and my trading. I do everything in my power to keep my distance from people who exhibit these traits. Thanks to the power of the internet, we now have the ability to construct our circles of influence in whatever way we see fit. Surround yourself with good traders.

I have done a fairly solid job of working these negative traits out of my system over the past few years. I never had an issue with conflict, and the positive outlook and taking responsibility for my results came pretty easily. I also was never much of a crowd follower, and I picked up a set of rules pretty early on.

My remaining issues are dealing with stress, impatience, and being disorganized. Organization is getting better, while patience and stress are things I continue to struggle with. (more…)

21 Trading Rules for Traders -ANIRUDH SETHI

  
Analysis, Education
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1. “The key to this game is finding an entry spot that is as close as possible to where you would be wrong on the trade idea.”

2. “If you are bullish when you look at a chart. Turn the chart upside down and see if you are bearish for extra confirmation. If you are, pull the trigger.”

3. “If you take profit for no reason than that you have a profit and don’t want to lose it, you are a cunt.”

4. “Why do you fucking insist on selling when the market is red? Are you some kind of cunt? You buy on red. Sell on green.”

5. “Double tops and bottoms can be very profitable opportunities if you trade them AS they form.”

6. “You’re buying just because there’s a “psychological” round number? Are you some kind of fucking cunt?”

7. “You have to act on your intuition. If you get a strong feeling about a market – even if you are not sure completely why – act on it. But know that feelings can be wrong and be quick to act if the market does not confirm your intuition.”

8. “There is no such thing as a price that is too high or a price that is too low.”

9. “You need to grow a pair of balls when your position goes onside. There is little point in calling a top or a bottom only to take a few points. You have to be able to hold a position.”

10. “If you can’t make a decision, leave your trading desk and take a break. Take a 10 minute walk around the block. Come back and sit down. Close your eyes and take a few deep breaths. Open your eyes and immediately do what you think is best. “ (more…)

Reminiscences of a Stock Operator (Jesse Livermore) : Edwin Lefevre 1923

  
  Education
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101% Must Read this article +Buy this Book too …A Bible for Every Trader !

The book starts with Livermore’s early trading career that was essentially scalping the markets for short trem profits using the tape and how he got to understand price movements before a bullish or bearish run. Livermore made $millions 3 times and lost it each time. He sadly ended up committing suicide in 1940 in the Sherry Netherland Hotel. He had amassed a $100m fortune by this time and no-one knew what happended to it. Maybe a trading disaster of some kind….who knows.

Some quotes and passasges I loved from the book

Grades of Suckers : The beginner knows nothing and everybody, including himself, knows it. But the next, or second, grade thinks he knows a great deal and makes others feel that way too. He is the experienced sucker, who has studied not the market itself but a few remarks about the market made by a still higher grade of suckers. The second-grade sucker knows how to keep from losing his money in some of the ways that get the raw beginner. It is this semisucker rather than the 100 per cent article who is the real all-the-year-round support of the commission houses. He lasts about three and a half years on an average, as compared with a single season of from three to thirty weeks, which is the usual Wall Street life of a first offender. It is naturally the semisucker who is always quoting the famous trading aphorisms and the various rules of the game. He knows all the don’ts that ever fell from the oracular lips of the old stagers excepting the principal one, which is: Don’t be a sucker!

This semisucker is the type that thinks he has cut his wisdom teeth because he loves to buy on declines. He waits for them. He measures his bargains by the number of points it has sold off from the top. In big bull markets the plain unadulterated sucker, utterly ignorant of rules and precedents, buys blindly because he hopes blindly. He makes most of the money until one of the healthy reactions takes it away from him at one fell swoop.

Sitting Tight : It was never my thinking that made me my big money; but my sitting. Sitting tight! Men who can both be right and sit tight are uncommon

Being Wrong : I was wrong; and the only thing to do when a man is wrong is to be right by ceasing to be wrong. get out of the trade.

Being Right : What is the use of being right unless you get the most use out of it ?! (maximising trades)

News : I work in harmony with the markets and take the path of least resistance every time. The trend is always established before the news is published. In Bull markets bear items are ignored and Bull items are exaggerated. (more…)

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