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10 Thoughts for Traders

  1. Managing your risk, you will not be around to win if you do not control your risk per trade. How many losses in a row can you survive? Surviving the market is magic at times.
  2. Trading a consistent methodology is magical because you will be consistent enough to make money when a market environment rolls around that it works in, single trades by themselves mean nothing outside the context of a method.
  3. Trading a methodology you believe in will enable you to trade it through draw downs instead of giving up.
  4. Understanding your edge will enable you to have the mental toughness to trade knowing eventually you will get the pay off.
  5. Trading price action versus your own opinion will help you magically be on the side of the majority most the time.
  6. Trading in the direction of the trend will enable you to be right more times than wrong most of the time.
  7. Cutting losses short and letting winners run will make you profitable. Now that is the magic of asymmetry.
  8. Only trading in markets and trading vehicles you understand will keep you safe from many big mistakes.
  9. Doing nothing when you do not know what to do is a plan that will save you much money.
  10. Spending thousands of hours studying charts, reading books from successful traders, and doing the right homework will make you successful eventually so all your friends can tell yo how lucky you are. Then you can tell them that is isn’t magic, trading is a lot of hard work.

Schwager’s New Hedge Market Wizards Book w/ Dalio, Thorp, Woodriff

Looks like Schwager is putting out a new version of his famous Market Wizards series.  Personally I’d like to see a “where are they now” from the past few books. (His other books here.)
Hedge Fund Market Wizards
Table of Contents
Introduction
Part I: Macro Men
Chapter 1 Colm O’Shea: Knowing When It’s Raining
Chapter 2 Ray Dalio: The Man Who Loves Mistakes
Chapter 3 Scott Ramsey: Low-Risk Futures Trader
Chapter 4 Jamie Mai: Seeking Asymmetry
Chapter 5 Jaffray Woodriff: The Third Way
Part II: Multi
Chapter 6 Edward Thorp: The Innovator
Chapter 7 Larry Benedict: Beyond Three Strikes
Chapter 8 Michael Platt: The Art and Science of Risk Control
Part III: Equity
Chapter 9 Steve Clark: Do more of What Works and Less of What Doesn’t
Chapter 10 Martin Taylor: The Tsar Has No Clothes
Chapter 11 Tom Claugus: A Change of Plans
Chapter 12 Joe Vidich: Harvesting Losses
Chapter 13 Kevin Daly: Who Is Warren Buffett?
Chapter 14 Jimmy Balodimas: Stepping in Front of Freight Trains
Chapter 15 Joel Greenblatt: The Magic Formula
Conclusion 40 Market Wizard Lessons
Appendix 1 The Gain to Pain Ratio
Appendix 2 TITLE TK

Asymmetry

symetryA general principle in trading for me is that without thorough investigation, comprehension, and experimentation leading to full acceptance, no trading rule or system can be properly executed. If one cannot completely understand and embrace the reasoning behind some method or axiom, whether internally discovered or externally given, the reflex necessary to act without further thinking or doubt is fatally compromised — the circuit between the eyes watching the screen and the finger on the trigger cannot afford even the slightest impedence. One area in my trading which I’ve been struggling over has been the disparity between the success of my entries versus the failure of my exits on profitable trades. If I had the ability to accurately anticipate and identify the origins of a move, why were my attempts in capturing and keeping the bulk of the profits so horribly inept? Why was my timing in closing trades so blatantly pathetic in comparison with their openings, to the point where I would either consistently stop-out on the lows of retracements, or conversely wind up giving back the entire move if I tried to avoid getting shaken out. (more…)