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Is market a battlefield for you?

Have you ever heard something like “The market is a battle, be ready to fight with all you’ve got,” or “The market is a war,” or any variation of this theme?  I bet you have, it’s a fairly common theme. But is it true, or better question might be: is this a mindset that you want to adopt? 
Don’t get me wrong – by no means do I want to present a marketplace as a happy place where  refined gentlemen high-five your each win (hmm, do refined gentlemen high-five at all? or they back-slap only?) and console you with fine whiskey and cigar after each loss. No, they are out to get you just as much as you – them. In that sense, anyone in the market is an enemy of anyone else. But that’s not really the point. The point is, is kind of attitude toward the marketplace and its happenings going to help you survive it, navigate it successfully? Or is it going to undermine your success? 
 
If the market is war for you, you are going to be in the fighting mode all the time. Can you function well for long in a constant fight mode? It’s extremely tense mode which is going to wear you out rather quickly. Instead, allow me to offer you a very different attitude – one where a market is a natural environment for a trader – environment where certain patterns govern all the comings and goings. Is it a dangerous place for a trader? Of course it is. Think of it as of ocean. It’s a dangerous place to be and swimming in it is a dangerous thing to do – just as trading the markets.

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Quotes for Traders

Planning, Discipline & Patience.
  • ‘Predicting rain does n’t count; building arks does’: Warren Buffett’s Noah Rule.
  • “To know and not to do, is not yet to know” – Courtesy of Tom Witters.
  • ‘It’s easy to have faith in yourself and have discipline when you’re a winner, when you’re number one. What you got to have is faith and discipline when you’re not a winner.’ – Vince Lombardi
  • ‘After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!’ – Jesse Livermore

Fear

  • ‘Never let fear of striking out, get in your way’: Babe Ruth.

Perspectives

  • ‘It’s tough to make predictions, especially about the future,’ – Lawrence Peter ‘Yoggi’ Berra.
  • “go as far as you can see, and when you get there , you will see further.” –
  • anonymous
  • ‘Don’t worry what others think… They don’t do it very often’ – Courtesy of Mark Carstens.
  • “A little learning is a dangerous thing, but we must take that risk because a little is as much as our biggest heads can hold.” – George Bernard Shaw.
  • “Those who cannot remember the past are condemned to repeat it” – George Santayana.
  • “Glory is fleeting but obscurity is eternal” – Napoleon
  • ‘A long term investment is when I break even.’ – Courtesy of David Wong.
  • “There are many truths, but only one reality” – Courtesy of Robin Farrell.
  • ‘It’s not whether you get knocked down, it’s whether you get up.’ – Vince Lombardi.
  • ‘We would accomplish many more things if we did not think of them as impossible.’ – Vince Lombardi
  • “Vision – It reaches beyond the thing that is, into the conception of what can be. Imagination gives you the picture. Vision gives you the impulse to make the picture your own.” – Robert Collier.
  • “If you’re 30 minutes into the game and you don’t know who the patsy is, you’re the patsy.” – Courtesy of Saranjot Dosanjh.
  • ‘Price is observable and objective while value is perceived and subjective’. – John Murphy.
  • ‘In theory, there is no difference between theory and practice. In practice there is.’ – Yogi Berra.
  • “As a rule, Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works…. The Failure of great banks… and mercantile firms…are the symptoms incident to the disease, not the disease itself.” – John Stuart Mill (1867).
  • ‘You need three bear markets to know what to do. The first nearly wipes you out, the second you learn how to survive and the third you take by the scruff of the neck and enjoy it.’ – Crispin Odey of Odey Asset Management.
  • “Never in recorded history, has the supply of capital not overwhelmed the supply of opportunity.” – Joseph Lassiter .
  • ‘You only live once but if you work it right, once is enough’. – Joe E. Lewis.
  • “If you really know whats going on, you don’t even have to know whats going on to know whats going on… You can ignore the headlines because you anticipated them months ago” – Michael Steinhardt.
  • ‘Another lesson I learned early is that there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.’ – Jesse Livermore.
  • “Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money. The object is to recognize the trend whose premise is false, ride that trend, and step off before it is discredited.” – Soros.

On Losses (and Profits). 

  • ‘Tradings only real secret is… The best loser is the long-term winner’ – Phantom
  • “Trading is a losing game, the best loser is the long-term winner” – Anonymous.
  • ‘Losses can either be lost money, or tuition in the school of trading’ – Courtesy of Mark Moskowitz.
  • ‘The worst advice I use to get was. – ‘No one went broke taking a profit’’. – Courtesy of John Berra.
  • “It seems that the necessary thing to do is not to fear mistakes, to plunge in, to do the best that one can, hoping to learn enough from blunders to correct them eventually.” – Abraham Maslow
  • ‘“Learn to like your losses”. Why? Because they are small!’ – Courtesy of Stuart A.Brown.
  • “One common adage…that is completely wrongheaded is: You can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits.” – William Eckhardt.
  • “Its not about being right or wrong, rather, its about how much money you make when you’re right and how much you don’t lose when you’re wrong.” – George Soros.
  • “The first loss is the best loss.” – Jim Rogers.
  • “Losers average Losers”…Paul Tudor Jones.
  • “You learn nothing from your winners and everything from your losers.” – Courtesy of Jeff Horn.
  • ·“To become a Master Trader, you must first be a successful loser.” – Jeff Horn.

Ego

  • “Don’t be a hero. Don’t have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead.” – Paul Tudor Jones

Personal Responsibility and Self-awarenss (more…)

FEAR

No, not the fear you’re thinking of, the other kind of fear, the fear of missing out.

Many people believe there are two emotions that traders feel, fear and greed, I disagree, it’s only fear.  The fear of loss and the fear of not having enough.  There’s a difference between being greedy and being fearful of not having enough, and it’s important.  Greed is defined by the excessive desire to possess wealth or goods.  Synonyms include lust and gluttony.  The fear of not having enough is very different, and I believe that is what drives market participants.

Trading is inherently a competitive exercise.  We look across the desk at the guy next to us and see that he made X amount of dollars today and we made less.  We look at the major averages as benchmarks, we listen to people taking profits on our StockTwits stream and feel both happy for them and wanting to punch them in the face for making a better trade on the same stock.  It’s only natural.  And when the market is moving well, not being involved while everyone else is, while your benchmark is climbing, traders can feel a considerable amount of fear.

I’ve felt this many times, the fear of not having enough.  And I’ve become pretty good at gauging both my own emotions regarding this and the pulse of the market as a whole.  Many times this emotion can be seen exhibited in the price action through a blow off top where price accelerates at the end of a big move and then reverses sharply.  Intermediate term swing and position trading is about staying with the trend and not getting shaken out, while managing your risk well. (more…)

One Liners

“There are old traders, there are bold traders, but there are no old, bold traders.

“There are a million ways to make money in the market. The irony is that they are all very difficult to find.

“Most traders take a good system and destroy it by trying to make it into a perfect system.

“If you’re going to panic, panic early.

“We don’t see things as they are, we see things as we are.

“If you look around the table and don’t see a sucker, then you are the sucker.

“If you find yourself in the bottom of a deep hole, the first thing to do is stop digging.

“The system wasn’t designed so that most people could beat it.

“At all levels of play the secret of success lies not so much in playing well as in not playing badly.

“The most dangerous thing in the world is to think you’ve got the time to play it safe.”

TRADING QUOTES

Planning, Discipline & Patience.
  • ‘Predicting rain does n’t count; building arks does’: Warren Buffett’s Noah Rule.
  • “To know and not to do, is not yet to know” – Courtesy of Tom Witters.
  • ‘It’s easy to have faith in yourself and have discipline when you’re a winner, when you’re number one. What you got to have is faith and discipline when you’re not a winner.’ – Vince Lombardi
  • ‘After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!’ – Jesse Livermore

Fear

  • ‘Never let fear of striking out, get in your way’: Babe Ruth.

Perspectives

  • ‘It’s tough to make predictions, especially about the future,’ – Lawrence Peter ‘Yoggi’ Berra.
  • “go as far as you can see, and when you get there , you will see further.” –
  • anonymous
  • ‘Don’t worry what others think… They don’t do it very often’ – Courtesy of Mark Carstens.
  • “A little learning is a dangerous thing, but we must take that risk because a little is as much as our biggest heads can hold.” – George Bernard Shaw.
  • “Those who cannot remember the past are condemned to repeat it” – George Santayana.
  • “Glory is fleeting but obscurity is eternal” – Napoleon
  • ‘A long term investment is when I break even.’ – Courtesy of David Wong. (more…)

The influence Of Hope & Fear

In trading psychology, two emotions that are constantly to the fore are hope and fear. One of the traders who recognised this was the legendary trader W D Gann. 

“Hope and fear: I have written about this often in my books and I feel I cannot repeat it too often. The average person buys commodities because they hope they will go up, or because someone advises them, they will go up. This is the most dangerous thing to do, never trade on hope. Hope wrecks more people’s lives than anything else. Face the facts, and when you trade, trade on the facts, eliminating hope”
“Fear causes many losses. People sell out because they fear commodities are going lower, but they often wait until the decline has run its course and sell near the bottom – never make a trade on fear”