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“What advice would you give to a novice trader?” by Jack D Schwager

  
  Education
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This was taken from the book “The New Market Wizards”, it’s one of the questions posted by Jack D Schwager to Gil Blake. And this was his answer:
“There are five basic steps to becoming a successful trader.

  • First, focus on trading vehicles, strategies, and time horizons that suit your personality.
  • Second, identify non-random price behaviour, while recognizing that markets are random most of the time.
  • Third, absolutely convince yourself that what you have found is statistically valid.
  • Fourth, set up trading rules.
  • Fifth, follow the rules. In a nutshell, it all comes down to: Do your own thing (independence); and do the right thing (discipline).”

Market Truisms and Axioms

  
  Education
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• Commandment #1: “Thou Shall Not Trade Against the Trend.”

• Portfolios heavy with underperforming stocks rarely outperform the stock market!

• There is nothing new on Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again, mostly due to human nature.

• Sell when you can, not when you have to.

• Bulls make money, bears make money, and “pigs” get slaughtered.

• We can’t control the stock market. The very best we can do is to try to understand what the stock market is trying to tell us.

• Understanding mass psychology is just as important as understanding fundamentals and economics.

• Learn to take losses quickly, don’t expect to be right all the time, and learn from your mistakes. (more…)

11 Simple One Liner Rules For Trading

  
Analysis, Education
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11RULES
 
 In every market, you control what matters most (your behavior).
• Risk is a permanent loss of capital.
• Start now. Start again tomorrow.
• Trouble is opportunity.
• “Diversified” does not mean “never going to go down.”
• Do less than you think you should.
• Get rich quick and get poor quick are sides of the same coin.
•  If it’s exciting then it’s probably a bad idea.
• This time isn’t different (and neither are you).
• Excess is never permanent.
• Your life is the best benchmark.
 

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