* Distractions come from unfinished business;
* I’ve yet to meet an impressive person who has needed to impress people;
* Passion without commitment is wasted energy;
* The early bird gets the worm; the night hawk gets the early bird;
* Success comes when doing things right is combined with doing the right things;
* When you are doing what you’re meant to be doing, effort gives energy;
* In trading, as in life, you succeed by acting decisively on your convictions;
* You will never win if your goal is to not lose; * Successful people are productive; they traffic in efforts, not intentions;
* Narcissism craves admiration; self-esteem desires understanding. .
Archives of “convictions” tag
rss‘Essential Qualities of the Speculator’
1. Self-Reliance. A man must think for himself,must follow his own convictions. George MacDonald says: “A man cannot have another man’s ideas any more than he can another man’s soul or another man’s body.” Self-trust is the foundation of successful effort.
2. Judgment. That equipoise, that nice adjustment of the faculties one to the other,which is called good judgment, is an essential to the speculator.
3. Courage. That is, confidence to act on the decisions of the mind. In speculation there is
value in Mirabeau’s dictum: “Be bold, still be bold; always be bold.” (more…)
Dickson G. Watts ‘Speculation As A Fine Art’ – A Speculator’s Essential Qualities
His list of ‘Essential Qualities of the Speculator’ and ‘Laws Absolute” show the timeless value of his insight:
1. Self-Reliance. A man must think for himself,must follow his own convictions. George MacDonald says: “A man cannot have another man’s ideas any more than he can another man’s soul or another man’s body.” Self-trust is the foundation of successful effort.
2. Judgment. That equipoise, that nice adjustment of the faculties one to the other,which is called good judgment, is an essential to the speculator.
3. Courage. That is, confidence to act on the decisions of the mind. In speculation there is value in Mirabeau’s dictum: “Be bold, still be bold; always be bold.”
4. Prudence. The power of measuring the danger, together with a certain alertness and watchfulness, is very important. There should be a balance of these two, Prudence and Courage;Prudence in contemplation, Courage in execution.
Lord Bacon says: “In meditation all dangers should be seen; in execution one, unless very formidable.”
Connected with these qualities,properly an outgrowth of them, is a third, viz:
promptness. The mind convinced, the act should follow. In the words of Macbeth; “Henceforth the
very firstlings of my heart shall be the firstlings of my hand.” Think, act, promptly.5. Pliability. The ability to change an opinion,the power of revision. “He who observes,”says Emerson, “and observes again, is always formidable.”
The qualifications named are necessary to the makeup of a speculator, but they must be in well-balanced
combination. A deficiency or an overplus of one quality will destroy the effectiveness of all. The possession of such faculties, in a proper adjustment is, of course, uncommon. In speculation, as in life, few succeed,many fail.
These are his ‘Laws Absolute’:
1. Never Overtrade. To take an interest larger than the capital justifies is to invite disaster. With such an
interest a fluctuation in the market unnerves the operator, and his judgment becomes worthless.2. Never “Double Up”; that is, never completely and at once reverse a position. Being “long,” for instance,do not “sell out” and go as much “short.” This may occasionally succeed, but is very hazardous, for should the market begin again to advance, the mind reverts to its original opinion and the speculator “covers up”and “goes long” again. Should this last change be wrong, complete demoralization ensues. The change in the original position should have been made moderately,cautiously, thus keeping the judgment clear and preserving the balance of the mind.
3. “Run Quickly,” or not at all; that is to say, act promptly at the first approach of danger, but failing
to do this until others see the danger, hold on or close out part of the “interest.”4. Another rule is, when doubtful, reduce the amount of the interest; for either the mind is not satisfied with the position taken, or the interest is too large for safety. One man told another that he could not sleep on account of his position in the market; his friend judiciously and laconically replied: “Sell down to a sleeping point.”
Poker and Trading…Some Rules Applicable to Both.
Pay Attention…and It Will Pay You. Concentrate on everything when you are playing/trading. Watch and listen; remember to do both and relate the two.
Understand When to Play Aggressively…It’s the Winning Way. Don’t be a tight or a loose player/trader; be a solid one and recognize when it is time to press your bets/positions. To attain superior returns in poker and investing over the long run, grind it out (in stocks until you are up 30%-40%, and then if you have convictions, go for a 100% year). If you can avoid losing and put together a few 100% years, you can achieve outstanding long-term investment performance.
Tells: Look For Them and You Will Find Them. Poker players and stock markets have tells — giveaway moves that are very revealing. Learn to recognize them. History is your textbook.
ESP…It’s a Jellyroll. In those rare instances when all your card knowledge and market judgment/knowledge leaves you in doubt, go with your strong feelings and not against it.
Honor: A Gambler/Trader’s Ace-in-the-Hole. A good reputation and respect from others will put you in good stead.
Be as Competitive as You Can Be. Go into a poker game and into a trade with the idea of completely destroying your opponent or scoring a major investment coup. If you win a pot or make a successful trade, nearly always play the next pot or make the next trade shortly thereafter — within reason. Although the cards and trades might break even in the long run, rushes do happen and momentum often feeds upon itself. When you earn the right to be aggressive, you should be aggressive. When one has a tremendous conviction in a poker hand or trade, you have to go for the jugular.
Art and Science…It takes Both. Both activities are more art than science — that’s why they are so difficult to master. Knowing what to do is about 10% of the game. Knowing how to do it is the other 90%.
Money Management. The same sound principles of money control apply to the business of tournament/professional poker and to successful investing. The way to build long-term returns or poker winnings is through preservation of capital and home runs.
The Important Twins of Poker/Investing, Patience and Staying Power. Come to the poker table or to the markets with enough time to stay and play for a while.
Alertness is a Key. You must stay alert at all times.
So is Discipline.
Never Let Your Mind Dwell on Personal Problems. Never play/trade when you are upset. Make a conscious and constant effort to discover any leaks in your play, and then eliminate them.
Control Your Emotions. Allowing your confidence to be shaken can turn a simple losing streak into a terrible case of going bad. Keep your emotions in check. When you lose a pot or make a poor investment decision, get up, walk around the chair or take some deep breaths. Don’t lose your poise. If a trade or poker hand does not work out, walk away from the position/hand. Be confident enough about your ability to win afterwards.
Trading Quotes from Trading Books
“There is only one side to the stock market; and it is not the bull side or the bear side, but the right side”
Comparing Paper Trading vs. Real Trading
“Are you a good shot?” “I can snap the stem of a wine glass at twenty paces” “That’s all well, but can you snap the stem of a wine glass while the wine glass is pointing a loaded pistol straight at your heart?”
“A man must believe in himself and his judgement if he expects to make a living at this game. That is why I don’t believe in tips. If I buy stocks on Smith’s tip, I must sell those stocks on Smith’s tip. I am depending on him”
“Speculation is a hard and trying business, and a speculator must be on the job all the time or he’ll soon have no job to be on”
“The more I made, the more I spent. This is the usual experience with most men. No, not necessarily with easy-money pickers, but with every human being who is not a slave of the hoarding instinct. Some men, like old Russell Sage, have the money-making and the money-hoarding instinct equally well developed, and of course they die disgustingly rich”
“If a stock doesn’t act right, don’t touch it; because being unable to tell precisely what is wrong, you cannot tell which way it is going. No diagnosis, no prognosis. No prognosis, no profit”
“The big money was not in the individual fluctuations but in the main movements-that is, not in reading the tape but in sizing up the entire market and its trend” (more…)
Trading Wisdom
| “When in doubt do nothing. Don’t enter the market on half convictions; wait till the convictions are fully matured….. And so, whenever we feel these elements of uncertainty, either in our conclusions or in the positions we hold, let us clean the house and become observers until as that eminent trader Dickson G Watts wrote, “The mind is clear; the judgement trustworthy.” |
Are Great Traders Born or Bred?
In a recent speech to a class at Harvard Business School Mark Sellers, founder of Chicago-based hedge fund Sellers Capital, argues that great traders are born and not bred. He believes that there are seven “structural assets” that cannot be taught, adding, ” They have to do with psychology. You can’t do much about that.”
The traits:
1) The ability to buy when others are panicking, and vice versa
2) An obsession with the trading game
3) A willingness to learn from past mistakes
4) An inherent sense of risk based on common sense
5) A confidence in your convictions and a willingness to stick with them
6) An ability to have “both sides of your brain working” (i.e. to go beyond the math)
7) The ability to live through volatility without changing your investment thought process
I think that some of the concepts discussed here are spot on (and I spend a great deal of time hammering home the importance of #7) , but I disagree with the overall idea that great traders are born, not made. I believe success in trading is not about a specific style, but rather about understanding your personality traits and then developing a trading style (and which product – i.e. stocks, commodities, fx) that fits you best.
We are who we are. That does not change throughout our life, but we can learn to wait for times when the market is paying our personality type and then generate successful returns when that window of opportunity appears.
Eternal Truths About Trading Success
Today afternoon once again read small book from the late 1800s written by Dickson G. Watts and reprinted by Traders Press. Entitled “Speculation as a Fine Art and Thoughts on Life”, the book begins with a description of the “qualities essential to the equipment of a speculator” (p. 8). Here is the author’s perspective, written well over a century ago:
* Self-Reliance – “A man must think for himself, must follow his own convictions…Self-trust is the foundation of successful effort.”
* Judgment – “…equipoise, that nice adjustment of the faculties one to the other…is an essential to the speculator.”
* Courage – “…confidence to act on the decisions of the mind…be bold, still be bold; always be bold.”
* Prudence – “The power of measuring the danger, together with a certain alertness and watchfulness, is very important.”
* Pliability – “The ability to change an opinion, the power of revision.” (more…)
Essential qualities for Speculator
1)Self-reliance :A man must think for himself ,must follow his own convictions.Self-trust is the foundation of successful effort.
2)Judgement :That equipoise ,that nice adjustment of the facilities one to the other ,which is called good judgement ,is an essential to the speculator.
3)Courage :That is ,confidence to act on the decisions of the mind.In speculation ,there is value in Mirabeau’s dictum :Be bold ,still be bold ,always be bold.
4)Prudence :The power of measuring the danger ,together with certain alertness and watchfulness is important.There should be a balance of these two ,prudence and courage ,prudence is contemplation ,courage in execution.Connected with these qualities ,properly an outgrowth of them ,is a third ,viz :promptness.The mind
convinced ,the act should follow.Think ,act ,promptly
5Pliability :The ability to change an opinion ,the power of revision.He who observes ,says Emerson,and observes again ,is always formidable.
Are Great Traders Born or Bred?
| Harvard Business School Mark Sellers, founder of Chicago-based hedge fund Sellers Capital, argues that great traders are born and not bred. He believes that there are seven “structural assets” that cannot be taught, adding, ” They have to do with psychology. You can’t do much about that.”The traits: 1) The ability to buy when others are panicking, and vice versa 2) An obsession with the trading game 3) A willingness to learn from past mistakes 4) An inherent sense of risk based on common sense 5) A confidence in your convictions and a willingness to stick with them 6) An ability to have “both sides of your brain working” (i.e. to go beyond the math) 7) The ability to live through volatility without changing your investment thought process I think that some of the concepts discussed here are spot on (and I spend a great deal of time hammering home the importance of #7) , but I disagree with the overall idea that great traders are born, not made. I believe success in trading is not about a specific style, but rather about understanding your personality traits and then developing a trading style (and which product – i.e. stocks, commodities, fx) that fits you best. |