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Trader Vic’s Principles of Trading

  
  Education
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It’s a helpful book to return to when market conditions get tough. A great place to start is Vic’s “business philosophy,” as encapsulated in three rules:

1. Preservation of Capital

2. Consistent Profitability

3. Superior Returns

Below is Sperandeo in his own words:

Preservation of Capital

Preservation of capital is the cornerstone of my business philosophy. This means that, in considering any potential market involvement, risk is my prime concern. Before asking, “What personal profit can I realize?”, I first ask, “What potential loss can I suffer?” (more…)

Three Trading Wisdom

  
  Education
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Preservation of Capital

Preservation of capital is the cornerstone of my business philosophy. This means that, in considering any potential market involvement, risk is my prime concern. Before asking, “What personal profit can I realize?”, I first ask, “What potential loss can I suffer?”
…There is one, and only one, valid question for an investor to ask: “Have I made money?” The best insurance that the answer will always be “Yes!” is to consistently speculate or invest only when the odds are decidedly in your favor, which means keeping risk at a minimum.

Consistent Profitability

Obviously, the markets aren’t always at or near tops or bottoms. Generally speaking, a good speculator or investor should be able to capture between 60 and 80% of the long-term price trend (whether up or down) between bull market tops and bear market bottoms in any market. This is the period when the focus should be on making consistent profits with low risk.
…Anyone who enters the financial markets expecting to be right on most of their trades is in for a rude awakening. If you think about it, it’s a lot like hitting a baseball — the best players only get hits 30 to 40% of the time. But a good player knows that the hits usually help a lot more than the strikeouts hurt. The reward is greater than the risk.

Pursuit of Superior Returns

As profits accrue, I apply the same reasoning but take the process a step further to the pursuit of superior returns. If, and only if, a level of profits exists to justify aggressive risk, then I will take on a higher risk to produce greater percentage returns on capital. This does not mean that I change my risk/reward criteria; it means that I increase the size of my positions.

Trader Vic’s Principles of Trading

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

It’s a helpful book to return to when market conditions get tough. A great place to start is Vic’s “business philosophy,” as encapsulated in three rules:

1. Preservation of Capital

2. Consistent Profitability

3. Superior Returns

Below is Sperandeo in his own words:

 Preservation of Capital

Preservation of capital is the cornerstone of my business philosophy. This means that, in considering any potential market involvement, risk is my prime concern. Before asking, “What personal profit can I realize?”, I first ask, “What potential loss can I suffer?”
…There is one, and only one, valid question for an investor to ask: “Have I made money?” The best insurance that the answer will always be “Yes!” is to consistently speculate or invest only when the odds are decidedly in your favor, which means keeping risk at a minimum. (more…)

Trader Vic’s Principles of Trading

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

It’s a helpful book to return to when market conditions get tough. A great place to start is Vic’s “business philosophy,” as encapsulated in three rules:

1. Preservation of Capital

2. Consistent Profitability

3. Superior Returns

Below is Sperandeo in his own words:

 Preservation of Capital

Preservation of capital is the cornerstone of my business philosophy. This means that, in considering any potential market involvement, risk is my primeconcern. Before asking, “What personal profit can I realize?”, I first ask, “What potential loss can I suffer?”
…There is one, and only one, valid question for an investor to ask: “Have I made money?” The best insurance that the answer will always be “Yes!” is to consistently speculate or invest only when the odds are decidedly in your favor, which means keeping risk at a minimum.

Consistent Profitability

Obviously, the markets aren’t always at or near tops or bottoms. Generally speaking, a good speculator or investor should be able to capture between 60 and 80% of the long-term price trend (whether up or down) between bull market tops and bear market bottoms in any market. This is the period when the focus should be on making consistent profits with low risk.
…Anyone who enters the financial markets expecting to be right on most of their trades is in for a rude awakening. If you think about it, it’s a lot like hitting a baseball — the best players only get hits 30 to 40% of the time. But a good player knows that the hits usually help a lot more than the strikeouts hurt. The reward is greater than the risk.

Pursuit of Superior Returns

As profits accrue, I apply the same reasoning but take the process a step further to the pursuit of superior returns. If, and only if, a level of profits exists to justify aggressive risk, then I will take on a higher risk to produce greater percentage returns on capital. This does not mean that I change my risk/reward criteria; it means that I increase the size of my positions.

Stick to your game plan

  
  Education
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the-game-plan-poster-425Sticking to your game plan is the hardest thing to do as a trader.The reason it’s so hard is that it take strict discipline and an emotional detachment from the outcome.Knowing what to do and doing it are two seprate issues.Trading involves so many unforseen elements and market fores the mishaps and fuzzy thinking materialize even at the most advanced levels.The only way to trade suscessfully through this sea of uncontrollable elements is to have the discipline to stick to your game plan.Your plan is the shield that no market force can penetrate ,unless let it.

The main reason experienced traders lose is that they fail to follow their own rules.There are hundreds of reasons and excuses for deviating from a trading plan-for breaking your rules.In the long run ,the reasons make zero difference.In the end ,people are judged by their results ,not the quality of their excuses.In an unstructured environment with multiple sources of reason pulling you in different directions ,rules become the cornerstone for success.

A trading plan is predictable.It provides sources of reason given any number of existing circumstances.It filers out noise and encourages discipline.Remember that having a trading plan and sticking to it is invaluable.The simple recognition of this fact can provide the stimulas to adhere to your own plan.

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