- I approach every stock with the understanding that my knowledge is imperfect, that I could be wrong and I give myself permission to make mistakes.
- If something falls more than 10% versus the market, I force myself to re-evaluate my thesis and think about how I could be wrong – what is the price action trying to tell me.
- I ask myself if I didn’t own the stock here, would I buy it today. If the answer is no, I sell immediately.
- If something falls below its 200-day moving average I sell 50% of the position right away, and again re-evaluate my thesis.
- If a position is causing me a lot of stress or is consuming an undue amount of time on a weekly basis, I cut 50% – the position is obviously too big.
- If I wake up worried about a position repeatedly, I cut it 50% immediately.
Latest Posts
rss
Who isn't a central banker these days?
The War on Christmas claims a battlefield casualty.
Stuck in line at airport? The humble ant can help you
Some scientists are trying to find answers to human problems by unlocking the secrets of fish schools and insect swarms, applying their behavioral patterns to ease congestion at airports or perfect self-driving technology.
Bottom-up communication
“The way this job is being done now is worse than how ants would do it,” Katsuhiro Nishinari, a professor at the University of Tokyo, often tells executives.
Nishinari has worked with 10 companies in areas such as manufacturing and logistics to research how to improve business practices. He took note of ant behavior while studying the mechanisms behind gridlock and now tests ways to apply it to how humans work.
Lines of ants do not need to slow down even when the insects gather en masse to move a big piece of food. “Ants use pheromones laid on the ground to communicate information like in a game of telephone,” Nishinari explained. This bottom-up method lets them “respond flexibly based on conditions,” he said.
The lesson has been applied in the customs area at Narita Airport near Tokyo, where the number of immigration counters had not kept up with the surge in foreign visitors, leading to long wait times. Nishinari helped develop a solution that involves sharing detailed information among airlines, the airport operator and the Ministry of Justice. (more…)
ABC’s of Stock Trading
This is not like any other ABC list you might have come across about trading stocks. There are no real terms here. The following is the ABC’s of successful stock trading.
A – Action, nothing happens until you DO SOMETHING.
B – Bear trap, don’t get sucked into it.
C – Cash, not making too much when you are holding cash.
D – Due diligence, don’t jump into a position blindly.
E – Early, the best traders make a move before its popular.
F – Fear to lose money, the hardest thing to overcome in trading.
G – Greed, try to make a quick buck, and lose a quick thousand.
H – Humbled, no trader is immune from bad trades.
I – Ignorance, following recommendations blindly puts all the blame on you.
J – Justification, the more you have to convince yourself, the less likely the trade will probably work.
K – Keep discipline, stick to your strategy and have faith it will work.
L – Losses, accept them and move on. Don’t dwindle on the past.
M – Money, what makes the world turn.
N – Never is impossible, in the stock market ANYTHING can happen.
O – Only if I had…, the worst statement a trader can make.
P – Perception, moves the market more than the actual facts.
Q – Quality vs. Quantity, which one works best for your system?
R – Realized Profit, you haven’t made or lost any money until you sell.
S – Strategy, never enter a position until you know the exit plan.
T – Trade Triangle Technology… need I say more?
U – Understatement, everybody succeeds in the stock market.
V – Value, reason traders buy and sell because they think the stock price should be higher or lower.
W – Write downs, something you don’t want to see a company do too often.
X – Xcited (I know, I know), nothing feels better than executing a profitable trade.
Y – Your alone, at the end of the day the only person who cares about your account is you.
Z – Zenith, where we would like to exit your stock position.
Quote From Alexander Elder ,Mark Douglas
The most important thing in making money is not letting your losses get out of hand
Greece Bailout…..Best Picture
Draw your future – Take control of your life -VIDEO
5 Reasons Traders Lose Money
- Your method or system doesn’t work. This is a big one, and one of the hardest to fix. If you’re buying random stocks based on chatroom tips, that won’t work. If you’re buying based on what you think about the news, that won’t work. If you’re using some untested technical pattern, that won’t work. The only way you can build enduring success is to have a system that is your own and in which you fully understand the edge and variability of the system results. The only way (that I know) to do this is either to be taught such a system in enough detail that you own it, or do develop your own. Finding a system that works is not easy. I think most traders who fail probably failed because they were doing something that didn’t work and couldn’t work.
- You are impatient and take impulse trades. So, you have a system and it works, but if you don’t have the patience to wait for setups, then you essentially don’t have a system at all! Too many traders force trades or execute trades out of boredom. Don’t do this—it will destroy whatever edge you have in your system.
- You take trades on the wrong size. Any trading methodology depends on the balance of a large number of winners and losers. If you are randomly doing some trades bigger and some smaller, you can easily wipe out that edge. (On the other hand, some traders do make good, disciplined use of varying position sizes, but this is also a well-developed and tested part of their methodology.) Be consistent and disciplined in everything you do; that’s why the market pays you.
- You ignore stops. What do you do when a trade hits your stop? You get out. End of story. If you can’t develop this one skill, you can’t be a trader. You cannot afford, even once, to ignore your stop. Maybe the trade will work out this one time; maybe your prayers will be heard and the bad loss will turn around and become a winner? Ok, great, now what? Now you’ve just had a serious break of discipline and have had a bad learning experience as well because you got paid to do something wrong! The ongoing impact of a mistake like this and the false learning will ripple through your trading career for months or years. Don’t do this—respect your stops.
- You get out of winning trades without any reason. I think this is one of the great, underappreciated problems of learning to trade. Many people can develop the discipline to respect their stops, but then cave under the pressure of a winning trade. The thought of a winning trade reversing and giving back profit, the pressure of knowing the open winning trade would cover many losing trades, or the simple greed of wanting to ring the cash register—these can be overwhelming psychological pressures. It’s just as important to manage your winners with discipline, and that your trading plan has clear rules for when and how you get out of winning trades as well as losers.
The solution to most of these problems is not exciting: have a plan that works and execute that plan with discipline. Of course, there’s a lot more we can do at each step, but being aware of these errors will help protect against some of the worst, and most avoidable, mistakes that wait for the developing trader.