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"The Confident Trader "

  
  Education
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Confidence overcomes fear. Confidence also overcomes greed because a component of greed is an underlying sense of scarcity. To be confident doesn’t mean that every trade or trading day will be profitable. What it does mean is that when you look to where you want to go, you know that you can figure out a strategy that will get you there. And you know you can execute that strategy in a consistent manner. A successful strategy doesn’t mean anything if you don’t or can’t or won’t employ it.

Theoretically we should be as successful at trading and investing as our trading and investing strategies. Unfortunately the vast majority of traders and investors fall far short of the results of their strategies. They trip over themselves again and again on the way to employing their methods. My work as a trading coach is to enable traders around the world to become as good as their methods.

Confidence need not waver when you have dips and troughs and plateaus in your trading. Confidence is developed when you realize you can correct mistakes and learn from failures. You don’t persist in failing. You learn and move on. You don’t fear repeating the failure either, you simply anticipate correcting it.

Self esteem is basically the sum total of all the thoughts we have about ourselves. This is quite important because we do tend to become what we think about ourselves. The noted philosopher and psychologist, William James, said, “People, in general, become what they think of themselves.” Not only did he say this but he added that this was the essence of all we had learned in psychology in the prior 100 years.

What do you think of yourself as a trader? Do you believe that your dream of excelling as a trader is possible? Do you have a set of philosophies that support your dream? Are you as good as your methods? If not, it’s time to do something about it.

Consider my coaching program. I speak for an hour on the phone each week with the traders I coach. We review your trading, beliefs, attitudes, habits, and philosophies. I help you do more of what works and stop doing what doesn’t work. Through exercises, assignments, and repetitive listening to the CD’s I send, you can become as good as your methods. The money you invest in yourself—especially in difficult times—is truly the best investment you can make. It will pay you exponentially because you never leave yourself. Call me at 800-692-0080, and we’ll discuss it.

Losers Average Losers

  
  Education
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There is a famous picture of Paul Tudor Jones relaxing in his office with his feet kicked up. A single sheet of loose-leaf paper is tacked on the wall behind him with the simple phrase written out in black marker: “Losers Average Losers”. Trite meaningless talk? Not so fast.

Famed trader Jesse Livermore warned 100 years ago against averaging losses. For example, you buy a stock at 50, and two or three days later if you can buy it at 47, you average down by buying another hundred shares, making an average price of 48.5. Having bought at 50 and being concerned over a three-point loss on a hundred shares, what rhyme or reason is there in adding another hundred shares and having the double worry when the price hits 44? At that point, there would be a $600 loss on the first hundred shares and a $300 loss on the second shares. If you are able to apply such an unsound principle, you can keep on averaging down by buying 200 at 44, then 400 at 41, 800 at 38, 1600 at 35, 3200 at 32, 6400 at 29, and so on (source: Jesse L. Livermore, How to Trade in Stocks: The Livermore Formula for Combining Time Element and Price).

Losses are a part of the game. You want no losses? You want positive returns every month? It does not work that way, that is, not unless you were lucky enough to be invested in the Bernard Madoff Ponzi-scheme which has resulted in assorted criminal convictions and a few suicides. Losses are not your problem. Its how you react to them. Ignore losses with no plan, or try to double down on your losses to recoup, and those losses will come back like a Mack truck to run over your account.

Wisdom Not to Be Ignored

Don’t frown, double down! Not smart strategy.

Escalator up, express elevator down.

You can’t win if you are not willing to lose. It’s like breathing in, but not breathing out.

Are You A Successful Speculator ?

  
  Education
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If you never trade, can you be a successful speculator?

If you  cost average, and are disciplined, are you a successful speculator?

If you compound at 50% per year for 10 years, and then lose everything in an afternoon, are you a successful speculator?

If you lose everything in an afternoon, and then learn from your mistake, and then compound at 50% for the next 10 years, are you a successful speculator?

If you compound at 6% per year for 10 years, and never have a meaningful drawdown, are you a successful speculator?

If the risk free rate is 6%, and you are making 12%, are you a more successful speculator then if the risk-free rate is 0% and you are making 6%?

If you think you are a successful speculator, can you really be a successful speculator?

If you think you are not a successful speculator, can you be a successful speculator?

Who are the most successful speculators of the past 100 years? Who are the least successful speculators of the past 100 years? 

The Confident Trader

  
  Education
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Confidence overcomes fear. Confidence also overcomes greed because a component of greed is an underlying sense of scarcity. To be confident doesn’t mean that every trade or trading day will be profitable. What it does mean is that when you look to where you want to go, you know that you can figure out a strategy that will get you there. And you know you can execute that strategy in a consistent manner. A successful strategy doesn’t mean anything if you don’t or can’t or won’t employ it.

Theoretically we should be as successful at trading and investing as our trading and investing strategies. Unfortunately the vast majority of traders and investors fall far short of the results of their strategies. They trip over themselves again and again on the way to employing their methods. My work as a trading coach is to enable traders around the world to become as good as their methods.

Confidence need not waver when you have dips and troughs and plateaus in your trading. Confidence is developed when you realize you can correct mistakes and learn from failures. You don’t persist in failing. You learn and move on. You don’t fear repeating the failure either, you simply anticipate correcting it.

Self esteem is basically the sum total of all the thoughts we have about ourselves. This is quite important because we do tend to become what we think about ourselves. The noted philosopher and psychologist, William James, said, “People, in general, become what they think of themselves.” Not only did he say this but he added that this was the essence of all we had learned in psychology in the prior 100 years. (more…)

Are you a successful speculator ?

  
  Education
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If you never trade, can you be a successful speculator?
If you dollar cost average, and are disciplined, are you a successful speculator?
If you compound at 50% per year for 10 years, and then lose everything in an afternoon, are you a successful speculator?
If you lose everything in an afternoon, and then learn from your mistake, and then compound at 50% for the next 10 years, are you a successful speculator?
If you compound at 6% per year for 10 years, and never have a meaningful drawdown, are you a successful speculator?
If the risk free rate is 6%, and you are making 12%, are you a more successful speculator then if the risk-free rate is 0% and you are making 6%?
If you think you are a successful speculator, can you really be a successful speculator?
If you think you are not a successful speculator, can you be a successful speculator?
Who are the most successful speculators of the past 100 years? Who are the least successful speculators of the past 100 years? 

Self-Beleif – Inspiration Poem. – 'The Man Who Thinks He Can'.

  
  Education
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In the constant battle for success in trading, there are many qualities needed to overcome the many hurdles put up by both the market and ourselves. People may possess these qualities in varying measures and differing degrees, however there is one quality which all people need to possess: ‘Self belief’. – Without this, you are almost certainly beaten already, and when you lose this, the perils are many. 
‘Self-Belief’ is a quality shared by winners across all fields, from sports, to business, to trading. There is a wonderful poem, written about 100 years ago, which nicely captures and summaries this point. – I advise many of my trading clients to print this poem off and keep it close to hand:
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The Man Who Thinks He Can.
By Walter D.Wintle.  
If you think you are beaten, you are
If you think you dare not, you don’t,
If you like to win, but you think you can’t
It is almost certain you won’t. 
If you think you’ll lose, you’re lost
For out of the world we find,
Success begins with a fellow’s will
It’s all in the state of mind. 
If you think you are outclassed, you are
You’ve got to think high to rise,
You’ve got to be sure of yourself before
You can ever win a prize. 
Life’s battles don’t always go
To the stronger or faster man,
But soon or late the man who wins
Is the man WHO THINKS HE CAN!

Ten Ways to Trade Like the Legendary Bill O’Neil

  
  Education
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If  one of the greatest traders in the world told you how to buy and sell the best stocks for the most profits would you listen? Well we have a chance to do just that with Bill O’Neil’s book “How to Make Money in Stocks”. His lifetime of research on how the market actually works is in his book.  Not his opinions but through studying the markets as a scientist would.

Not only did O’Neil’s firm study the best performing stocks of the past 100+ years but the AAII tested his system among fifty others for 12 years in real time and it won!

From January 1998 through December 2010, the American Association of Individual Investors has conducted an independent, real-time study of over 50 leading investing strategies, including CAN SLIM. The results show that IBD’s CAN SLIM strategy outperformed all other strategies, gaining +2,487.3% while the S&P 500 rose just 29.6%.

“After surveying all the top performing equity managers in the United States, Bill O’Neil was number one. His track record is second to none. And I’ve always wanted to work for the best.”

“In terms of long-term track record, yes. He has the best numbers. If you go back 20-25 years and you stack all the guys together that have been in the market that long, Bill’s got the highest returns. Higher than Peter Lynch. Higher than Buffett. It’s fantastic. I’ve painstakingly studied each of the firm’s market calls from I think it was 1968 onward because I wanted to see exactly where O’Neil was saying buy and sell. It just struck me, this accumulation/distribution and follow-through day technique works great because he’s never missed a major bull or a major bear market.”-Chris Kasher

  1. Do not diversify broadly, instead focus on the leading stocks in the best industry groups.
  2. Cut any loss when the stock is down 7%/8% from your buy point.
  3. Buy stocks that are going up in value, not down.
  4. Add to a position as the stock goes up in value from your buy point not at lower prices.
  5. Buy stocks near their highs for the year not their lows.
  6. Study price charts to discover how the best stocks behaved historically in price action.
  7. Trade long based on the trend of the general market.
  8. Buy the best stocks in the market as they break out of properly formed bases or when they bounce off their 50 day moving averages.
  9. Do not be influenced by others trade your plan.
  10. Buy stocks with the best earnings and sales growth at the right time using charts.
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