1. CONFIDENCE: absolutely essential in an environment that feeds on emotional instability.
2. TRUST: if you cannot trust yourself who can you trust? Trust your rules, trust your edge, trust that you will do the right thing-no matter what!
3. FOCUS: you will never learn all there is to learn about the market. Push your ego aside and focus on one market and one edge.
4. ACCEPTANCE: you have to accept what the market is willing to give or you will give the market what it wants to take. (more…)
Always in the past, and always in the future, the gatekeepers of information will want investors to consider the yin and yang:
An understanding of that, a consideration of that, anything related to that–has zero to do with having the right entry, exit and position sizing rules.
On not giving up: “Today is cruel. Tomorrow is crueler. And the day after tomorrow is beautiful.”
On past mistakes from “the dark days at Alibaba”: “If you don’t give up, you still have a chance. And, when you are small, you have to be very focused and rely on your brain, not your strength.”
On teamwork: “If we are a good team and known what we want to do, one of us can defeat ten of them.”
On having a larger mission: “It doesn’t matter if I failed. At least I passed the concept on to others. Even if I don’t succeed, someone will succeed.”
On perseverance: “We will make it because we are young and we will never, never give up.”
On work: “If we go to work at 8 a.m. and go home at 5 p.m., this is not a high-tech company and Alibaba will never be successful. If we have that kind of 8-to-5 spirit, then we should just go and do something else.”
On competition: “You should learn from your competitor, but never copy. Copy and you die.”
On Alibaba.com’s 2007 IPO: “Alibaba is not just a job. It’s a dream. It’s a cause. Let the Wall Street investors curse us if they want.”
On starting a company: “If you want to grow, find a good opportunity. Today, if you want to be a great company, think about what social problem you could solve.”
On the benefits of his technological ineptitude: “Intelligent people need a fool to lead them. When the team’s all a bunch of scientists, it is best to have a peasant lead the way. His way of thinking is different. It’s easier to win if you have people seeing things from different perspectives.”
On growth: “In carrying out e-commerce, the most important thing is to keep doing what you are doing right now with passion, to keep it up.”
“Four years ago, I told you that we needed to add one or more younger investment managers to carry on when Charlie, Lou and I weren’t around. At that time we had multiple outstanding candidates immediately available for my CEO job (as we do now), but we did not have backup in the investment area.
It’s easy to identify many investment managers with great recent records. But past results, though important, do not suffice when prospective performance is being judged. How the record has been achieved is crucial, as is the manager’s understanding of – and sensitivity to – risk (which in no way should be measured by beta, the choice of too many academics). In respect to the risk criterion, we were looking for someone with a hard-to-evaluate skill: the ability to anticipate the effects of economic scenarios not previously observed. Finally, we wanted someone who would regard working for Berkshire as far more than a job.
When Charlie and I met Todd Combs, we knew he fit our requirements. Todd, as was the case with Lou, will be paid a salary plus a contingent payment based on his performance relative to the S&P. We have arrangements in place for deferrals and carryforwards that will prevent see-saw performance being met by undeserved payments. The hedge-fund world has witnessed some terrible behavior by general partners who have received huge payouts on the upside and who then, when bad results occurred, have walked away rich, with their limited partners losing back their earlier gains. Sometimes these same general partners thereafter quickly started another fund so that they could immediately participate in future profits without having to overcome their past losses. Investors who put money with such managers should be labeled patsies, not partners. (more…)
50% winrate <> 1 Reward:Risk 40% winrate <> 1.5 RR 33% winrate <> 2 RR 25% winrate <> 3 RR Stop obsessing about winrate alone!
Successful traders know that success means consistency, more than it means immediate profits. Of course traders want to make money, but to do that consistently, you may have to learn by dealing with setbacks and unimpressive gains. The trick is not only to make money off of trades but to learn WHY you made that money. And if you simply get lucky now and then, you haven’t learned anything you can turn into a consistent strategy of success over a career, or even a lifetime, of day trading.
That’s why successful traders bank on consistent profits. They know that ignoring the small-profit trades and angling for a “grand slam” is a sure way to lose money. No one can repeatedly predict huge gains on any one trade. But many people can and do predict a host of small-profit trades that create the same, if not more, profit than people who get extremely lucky once or twice. (more…)
