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10 Money Lessons from Billionaires

  
Analysis, Education
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Billionaires have changed the way our world works. They’ve altered the way we communicate, travel, and live. And along the way, they have made incredible amounts of money for their efforts.

 Learning from the 10 billionaires below is not only a good idea if you want to boost your bank account, but also if you want your work to make a difference.

With that in mind, here are 10 lessons from billionaires on earning money, succeeding in business, and finding happiness in life.

1. “You become what you believe. You are where you are today in your life based on everything you have believed.” —Oprah Winfrey, net worth of $2.7 billion

First and foremost, you have to believe that greatness is possible. Many of the world’s billionaires have shifted the way our world works, because they believed that they were capable of doing something that was previously impossible.

Change is possible. Greatness is possible. But you can’t do anything unless you first believe in yourself.

2. “What we say here every day is that our success is really based on our members’ success, our community’s success.” —Pierre Omidyar, net worth of $6.7 billion

Your success is directly tied to how much you do for others. It’s not what you know. It’s not who you know. It’s what you do for who you know. Success follows generosity.

3. “The typical human life seems to be quite unplanned, undirected, unlived, and unsavored. Only those who consciously think about the adventure of living as a matter of making choices among options, which they have found for themselves, ever establish real self-control and live their lives fully.” —Karl Albrecht, net worth of $25.4 billion (more…)

Self-Discipline in Trading

  
  Education
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Having self-discipline is having the ability to follow through on your plans and goals.  Often times we get tugged in various directions and enticed by making choices that don’t help us along our path to our goals and fulfillment.

“The path of least resistance is what makes all rivers and some men crooked.”
                                                                                                                               – Napoleon Hill

Self-discipline is the ability to make the conscious choice (ultimately it becomes a habit) of doing the thing that will move you towards your goal – and sometimes it’s the hard or unnatural or unpopular thing to do.  It’s foregoing instant gratification for the longer term objective.  Typically, however, people operate on autopilot and this is dangerous when you have not yet developed the right ‘habits’ for success.

In the trading game, you must have self-discipline. You must look at the entire forest and not focus on one tree.  If you get too caught up in each and every trade, you will lose sight of the larger goal.

The key is to care a lot about your overall trading progress, but not care too much about any individual trade.

Your Identity also plays a huge role in this because if you see yourself as someone who lacks self-discipline, then all the will power in the world will not overpower this.  You are someone, in your mind, who lacks self-discipline.

So the key components to have self-discipline in Trading are: (more…)

10 Trading Thoughts

  
  Education
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1. You only have three choices when you are in a bad position, and it is not hard to figure out what to do:
(1) Get out
(2) Double up, or
(3) Spread it off.

I have always found getting out to be the best of all three choices.

  1. No opinion on the market or you are doubtful about market direction? Then stay out. Remember, when in doubt, stay out.
  2. Don’t ever let anyone know how big your wallet is, and don’t ever let anyone know how small it is either.
  3. If you snooze, you lose. Know your markets, when they trade, and what reports will affect the market price.
  4. The markets will always let you in on the losers; the market’s job is to keep you out of winners. Dump the dogs and ride the winning tide.
  5. Stops are not for sissies.
  6. Plan your trade, then trade your plan. He who fails to plan, plans to fail.
  7. Buy the rumor and sell the fact. Watch for volatility in these situations; it usually marks tops or bottoms in the markets.
  8. Buy low, sell high. Or buy it when nobody wants it, and sell it when everybody has to have it!
  9. It’s okay to lose your shirt, just don’t lose your pants; that is where your wallet is.

One last thought to leave with you. It applies not only to every-day life but to trading the markets as well:
Success is measured not so much by the wealth or position you have gained, but rather by the obstacles you have overcome to succeed!

HOW TO MAKE BETTER DECISIONS

  
Education, Video
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When you have the time make a decision to watch the following program on making better decisions.  You may find that you made the right decision to do so.
FROM THE INTRODUCTION:According to science: We are bad at making decisions. Our decisions are based on oversimplification, laziness and prejudice. And that’s assuming that we haven’t already been hijacked by our surroundings or led astray by our subconscious!
Featuring exclusive footage of experiments that show how our choices can be confounded by temperature, warped by post-rationalisation and even manipulated by the future, Horizon presents a guide to better decision making, and introduces you to Mathematician Garth Sundem, who is convinced that conclusions can best be reached using simple maths and a pencil!

Partly of emotion…

  
  Education
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The market is not a weighing machine, on which the value of each issue is recorded by an exact impersonal mechanism, in accordance with its specific qualities. Rather, should we say that the market is a voting machine, whereon countless individuals register choices which are the product partly of reason and partly of emotion. (emphasis mine).

Lesson for Traders

  
Education, Life
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bus-stop

(Must Read )

You are driving down the road in your car on a wild, stormy night,when you pass by a bus stop and you see three people waiting for the bus:
1. An old lady who looks as if she is about to die.
2. An old friend who once saved your life.
3. The perfect partner you have been dreaming about.

Which one would you choose to offer a ride to, knowing that there could only be one passenger in your car? Think before you continue reading.

This is a moral/ethical dilemma that was once actually used as part of a job application. You could pick up the old lady, because she is going to die, and thus you should save her first. Or you could take the old friend because he once saved your life, and this would be the perfect chance to pay him back. However, you may never be able
to find your perfect mate again.
YOU WON’T BELIEVE THIS…………………

The candidate who was hired (out of 200 applicants) had no trouble coming up with his answer. He simply answered: ‘I would give the car keys to my old friend and let him take the lady to the hospital. I would stay behind and wait for the bus with the partner of my dreams.’

Sometimes, we gain more if we are able to give up our stubborn thought limitations. 

And the lesson for traders?  Our stubborn thinking about what the market ought to do or should do can keep us from seeing what the market is doing.

Never forget that it may be best to get out of our own way and “think outside the charts.”  In so doing, we may just be able to find the best answer among several difficult choices.

Jack Schwager :Risk & Reward

  
  Education
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“In one experiment, subjects were given a hypothetical choice between a sure $3,000 gain versus an 80 percent chance of a $4,000 gain and a 20 percent chance of not getting anything. The vast majority of people preferred the sure $3000 gain, even though the other alternative had a higher expected gain (0.80 X $4,000 = $3,200). Then they flipped the question around and gave people a choice between a certain loss of $3,000 versus an 80 percent chance of losing $4,000 and a 20 percent chance of not losing anything. In this case, the vast majority chose to gamble and take the 80 percent chance of a $4,000 loss, even though the expected loss would be $3,200.

In both cases, people made irrational choices because they selected the alternative with the worse expected gain or greater expected loss. Why? Because the experiment reflects a quirk in human behavior in regards to risk and gain: people are risk averse when it comes to gains, but risk takers when it comes to avoiding a loss. And this relates very much to trading. It is exactly the quirk in human psychology that causes people to let their losses run and cut their profits short. So the old cliché of let your profits run and cut your losses short is actually the exact opposite of what human nature tends to do.”

17 One Liners for Traders

  
  Education
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Trade the market, not the money
• Always trade value, never trade price
• The answer to the question, “What’s the trend?” is the question, “What’s your timeframe?”
• Never allow a statistically significant unrealized gain to turn into a statistically significant realized loss (ATR)
• Don’t tug at green shoots
• When there’s nothing to do, do nothing
• Stop adjustments can only be used to reduce risk, not increase it.
• There are only two kinds of losses: big losses and small losses, given these choices – always choose small losses.
•  Don’t Anticipate, Just Participate
• Buy the strongest, sell the weakest (RSI)
• Sideways markets eventually resolve themselves into trending markets and vice versa
• Stagger entries & exits – Regret Minimization techniques
• Look for low risk, high reward, high probability setups
• Correlations are for defense, not offense
• Drawdowns are for underleveraged trading and research
• Develop systems based on the kinds of “pain” (weaknesses) endured when they aren’t working or you’ll abandon them during drawdowns.
• Be disciplined in risk management & flexible in perceiving market behavior

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