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Wall Street Its Mysteries Revealed Its Secrets Exposed By William C Moore 1921 – Greed

  
  Education
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It’s been a while since I last posted an excerpt or quoted from one of the trading books I own. Tonight’s small excerpt is from the book: ‘Wall Street. Its Mysteries Revealed: Its Secrets Exposed’ published in New York, 1921 by William C. Moore. The book contains short and to the point chapters like: ‘The crowd mind’, ‘How the public speculates’, ‘Mental suggestion’ and ‘Market advice’ to name but a few. I chose the one on ‘Greed’ as I consider it great advice and timeless wisdom. Enjoy.

Greed p. 123-124

An avaricious or keen desire for profits is one of the most prevalent causes of failure in speculation. This weakness is general among traders. They desire “just a little more ” profit. If the stock or commodity bought advances, then that’s proof to them that it will advance further and so they hang on. They usually overstay and thus miss their market. If they fail to obtain the top price and it reacts, then they assure or console themselves by the expression: “Oh, it will come back.” It may “come back” but often it does not, and instead, declines to below the purchase price and frequently results in a loss. The same observations apply to a short sale for a further anticipated decline. It is a good policy to be satisfied with a reasonable profit and be willing to leave some for the other fellow. The market is always there and other opportunities for making profits will present themselves while the greedy trader is waiting to get the last eighth.

Greed leads to disaster in another way. A speculator has started in to buy at the inception of a bull movement. He makes money. The more he makes, the more avaricious he becomes as the market moves forward. His confidence in himself increases until he develops a mental state known in the vernacular as “big head” or “swelled head”. He now has unbounded confidence in himself and “plays the limit”. Soon thereafter the market culminates at the top and the trend reverses, but Mr. Swelled Head is ignorant of this, so continues to buy on set-backs instead of selling on rallies. A drastic slump follows and Mr. B.H. goes to the scrap pile – BUSTED.

Greed is a bottomless pit which exhausts the person in an endless effort to satisfy the need without ever reaching satisfaction. – Erich Fromm

13 Trading Rules

  
  Education
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  • Let winners run. While momentum is in phase, the market can run much further than might be expected.
  • Corollary to that rule: Do not exit winners without reason!
  • Be quick to admit when wrong and get flat.
  • Sometimes a time stop is the right solution. If a position is entered, but the anticipated scenario does not develop then get out.
  • Remember: if one thing isn’t happening the other thing probably is. Historically, this has never been good for me…
  • Be careful of correlations. Several positions can often equal one large position bearing unacceptable risk. Please think.
  • I am responsible for risk management, money management, trade management, doing the analytical work and putting on every trade that comes.
  • I am not responsible for the outcome of any one trade. Markets are highly random. I do not have a crystal ball. I am not as smart as I think I am.
  • Risk management is the first and last responsibility. I can make almost any mistake and be ok as long as I do not violate my risk management parameters.
  • Opportunity comes every day. Do not neglect the work. Must do analysis every day.
  • Opportunity comes every day. Get out of poor positions. Move on.
  • I am a better countertrend trader than a trend trader. Sometimes the crowd is right, and they will run me over at those times if I’m not quick to admit I’m wrong.
  • If you’re going to do something stupid, at least do it on smaller size.

6 ways to think about risk

  
  Education
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1  Risk is not the same as volatility. Assets can be volatile on the upside as well as the downside. Risk should instead be viewed as the permanent loss of purchasing power.

2 A risk should not be evaluated based its frequency. Some risks only have to happen once to be catastrophic.

3 Sophistication and knowledge are not a form of or substitute for risk management.

4 Although following the crowd may feel comfortable, risks are just as catastrophic whether you suffer with company or suffer alone.

5 Bullish consensus manufacturers the greatest risks because nobody is prepared and everyone runs for the exits at the same time. Strong optimistic consensus provides a sense that nothing can go wrong. This is why the greatest catastrophes seem to come out of the blue.

6 Activity, research and analysis provides a false sense of control over the future. However devastating losses rarely due to a lack of brain power or analytical prowess.

Wall Street Its Mysteries Revealed Its Secrets Exposed By William C Moore 1921 – Greed

  
  Education
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Small excerpt is from the book: ‘Wall Street. Its Mysteries Revealed: Its Secrets Exposed’ published in New York, 1921 by William C. Moore. The book contains short and to the point chapters like: ‘The crowd mind’, ‘How the public speculates’, ‘Mental suggestion’ and ‘Market advice’ to name but a few. I chose the one on ‘Greed’ as I consider it great advice and timeless wisdom. Enjoy.

Greed p. 123-124

An avaricious or keen desire for profits is one of the most prevalent causes of failure in speculation. This weakness is general among traders. They desire “just a little more ” profit. If the stock or commodity bought advances, then that’s proof to them that it will advance further and so they hang on. They usually overstay and thus miss their market. If they fail to obtain the top price and it reacts, then they assure or console themselves by the expression: “Oh, it will come back.” It may “come back” but often it does not, and instead, declines to below the purchase price and frequently results in a loss. The same observations apply to a short sale for a further anticipated decline. It is a good policy to be satisfied with a reasonable profit and be willing to leave some for the other fellow. The market is always there and other opportunities for making profits will present themselves while the greedy trader is waiting to get the last eighth. (more…)

The Best Time for A Trade is When Everyone Else Disagrees

  
  Education
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If you think about it, it makes sense – the very best time to buy something is when everyone is convinced that the price is going to fall lower, and the very best time to sell something is when everyone is convinced the price is going to shoot to the moon. Just learn  the importance of trading against the crowd. The crowd is reacting to the market, and you learn to  react to the crowd, this simple change in mindset can produce incredible profits if you are willing to look like a fool (in the eyes of others).

Trading Lessons

  
  Education
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The market is a tough battle.  Each day there are chances and opportunities to make money though, it is the greatest form of free market capitalism known to man.  It’s a vast ocean with treasures; we just have to be able to unearth them at the right moment.  We have the ability to navigate carefully through markets, put our bets out there and see where the chips fall.

But if we are too loose with our capital then we are headed for a bad ending.  Discipline is one of the keys to success:  learn your craft and practice.  Each day that passes is one more great learning experience – capture it, analyze it and grow from it.  Use a trading system, pay attention to the timeless patterns of price/volume and believe in what you see and not what you hear. (more…)

Kung Fu vs. Trading

  
  Education
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You can learn a lot on trading by watching Kung Fu. Sounds crazy? Let me explain by the following video.

The first scene is where the market offers you an opportunity for a duel. Your opponent seems strong and fierce, but it’s not just about muscles and brute force.

– Bruce Lee shows respect for his opponent in the first scene. This is very important. Never understimate the market and always be nimble.

– When his opponent tries to scare him by breaking a wooden board, Bruce Lee does not show fear. You should never fear the market. Always have a clear mind but be watchful at all times. The market will test you. It will find your weak spots.

– It is okay to test the waters with small positions if you are not sure. As Bruce Lee shows by striking the first two blows, he is just testing his opponent’s speed. Checking to see if the water is safe to jump into.

– When Bruce Lee does a backflip kick, he shows his flexibility. The market might sneak up on you with a move you did not expect. It is your job to be prepared for anything and move as flexible as you can.

– Sometimes the market will go bezerk on you, trying to grab you by the balls. Again, you have to play tight defense at all times so you will not get hurt.

– Bruce Lee shows his amazing talent by performing a backturn kick onto his opponent. This is a highly effective and powerful strategy. Once you have developed a system that works for you, don’t try to change it for the sake of entertainment. It if works, it works! And that is great!

– From time to time you will make a great trade. Like when Bruce Lee kicks his opponent into the crowd. Don’t let this get into your head by thinking you own the market! Always stay nimble and be ready to strike again.

– You may think a fight is over. You may turn your back on a position thinking you have won. If you are up nice on a position and trade without a stop, you can still get hurt. Always play with stops. The market may sneak up from behind and pull a big gap down on you! Don’t let this happen. Always stay watchful and never trade without stops.

– Bruce Lee decides to end the fight finally. Don’t overstay your welcome in a trade. If you are up nicely and can take profits do so. We are not investors. We are traders. Finish the fight now and then and take profits. If you never finish a fight you will never take profits. If you never take profits you will never make money.

Beliefs of Winning Traders

  
  Education
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winner1

Winners share certain behaviors and beliefs. Check to see if you possess the traits and beliefs of winning traders !!!

  1. If you have the belief that you will win, you increase your chances of trading to win. In order to have this level of conviction, you must have a thoroughly-tested plan. You also must have a clear vision of how you will proceed with your plan to reach your goal. The more detailed you can visualize your goals being achieved, the more you will strengthen your internal belief and confidence that you will reach your goals.
  2. I’m sure you’ve heard the saying “I didn’t plan to fail; I failed to plan.” Without a plan, your results will tend to be mixed and uninspiring. Commit to writing down your trading plan, and make sure you can answer the questions found in a recent TrendWatch on creating your trading plan. (more…)

Trading Quotes

  
  Education
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The tape tells the truth, but often there is a lie buried in the human interpretation
Jesse Livermore
 Charts not only tell what was, they tell what is; and a trend from was to is (projected linearly into the will be) contains better percentages than clumsy guessing
R. A. Levy
The biggest risk in trading is missing major opportunities, most of enormous gains on my accounts came from 5% of trades.
Richard Dennis
 Your human nature prepares you to give up your independence under stress. when you put on a trade, you feel the desire to imitate others and overlook objective trading signals. This is why you need to develop and follow trading systems and money management rules. They represent your rational individual decisions, made before you enter a trade and become a crowd member.
A. Elder

Greed

  
  Education
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 Small excerpt is from the book: ‘Wall Street. Its Mysteries Revealed: Its Secrets Exposed’ published in New York, 1921 by William C. Moore. The book contains short and to the point chapters like: ‘The crowd mind’, ‘How the public speculates’, ‘Mental suggestion’ and‘Market advice’ to name but a few. I chose the one on ‘Greed’ as I consider it great advice and timeless wisdom. Enjoy.

Greed p. 123-124

An avaricious or keen desire for profits is one of the most prevalent causes of failure inspeculation. This weakness is general among traders. They desire “just a little more ” profit. If the stock or commodity bought advances, then that’s proof to them that it will advance further and so they hang on. They usually overstay and thus miss their market. If they fail to obtain the top price and it reacts, then they assure or console themselves by the expression: “Oh, it will come back.” It may “come back” but often it does not, and instead, declines to below the purchase price and frequently results in a loss. The same observations apply to a short sale for a further anticipated decline. It is a good policy to be satisfied with a reasonable profit and be willing to leave some for the other fellow. The market is always there and other opportunities for making profits will present themselves while the greedy trader is waiting to get the last eighth.

Greed leads to disaster in another way. A speculator has started in to buy at the inception of a bull movement. He makes money. The more he makes, the more avaricious he becomes as the market moves forward. His confidence in himself increases until he develops a mental state known in the vernacular as “big head” or “swelled head”. He now has unbounded confidence in himself and “plays the limit”. Soon thereafter the market culminates at the top and the trend reverses, but Mr. Swelled Head is ignorant of this, so continues to buy on set-backs instead of selling on rallies. A drastic slump follows and Mr. B.H. goes to the scrap pile – BUSTED.

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