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10 Most Foolish Things a Trader Can Do

  
  Education
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The Ten Most Foolish Things a Trader Can Do

  1. Try to predict the future movement of a stock, and stay in it no matter what.
  2. Risk your entire account on one trade with no stop loss plan.
  3. Have a winning trade but no exit strategy to get out, no trailing stop or exhaustion top signal.
  4. Ask for and follow the advice of others instead of trading with your own trading plan, method, rules, and system.
  5. Trade your emotions instead of signals: buy when you are greedy and sell when you are afraid.
  6. Trade your opinions, not a quantified method.
  7. Do not bother to do your homework on trading, just jump in and trade, you are smart, you will figure it out.
  8. Short the best and most expensive stocks in the stock market and buy the cheapest junk stocks.
  9. Put on trades you are 100% sure are winners so you do not even need a stop loss or risk management.
  10. Buy more of a trade that you are losing money in and sell your winners quickly to lock in small profits.

WISDOM FROM BERNARD BARUCH – For Traders & Investors

  
  Education
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From the SAME AS IT EVER WAS file: Bernard Baruch, a colleague and friend of Jesse Livermore’s, who made a fortune shorting the 1929 crash, and then who later advised presidents Woodrow Wilson and Franklin D. Roosevelt on economic matters, listed the following investment rules in his autobiography published in 1958 entitled Baruch: My Own Story.  These rules are still as applicable today.


1.  Don’t speculate unless you can make it a full-time job.
2.  Beware of barbers, beauticians, waiters–of anyone–bringing gifts of “inside” information or “tips.”(Avoid  Blue channels )
3.  Before you buy a security, find out everything you can about the company, its management and competitors, its earnings and possibilities for growth. (Don’t Trust Indian Management )
4.  Don’t try to buy at the bottom and sell at the top.  This can’t be done–except by liars.
5.  Learn how to take your losses quickly and cleanly.  Don’t expect to be right all the time.  If you have made a mistake, cut your losses as quickly as possible.
6.  Don’t buy too many different securities.  Better have only a few investments which can be watched.
7.  Make a periodic reappraisal of all your investments to see whether changing developments have altered their prospects.
8.  Study your tax position to know when you can sell to greatest advantage.
9.  Always keep a good part of your capital in a cash reserve.  Never invest all your funds.
10.  Don’t try to be a jack of all investments.  Stick to the field you know best.

Reminiscences of Marty Zweig: What I Learned From a Market Great

  
  Education
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The early years

After degrees from Wharton, University of Miami and Michigan State, Marty started his career in academia but ultimately became one of the most respected stock market “gurus” in the modern era. I have years’ worth of memories of Marty, and hope readers will indulge me as I reminisce and share some of the most important market lessons I learned from one of the greats.

But first, the personal stuff. Marty was brilliant, there’s no doubt; but he was also quirky, goofy and affable. He was the consummate worrier… but he was also the ultimate warrior. He lived, ate and breathed the markets and perpetually (and tirelessly) strived to “figure it out.”

One of my greatest memories is getting to see first-hand his now-famous memorabilia collection—to which there are no comparables. Among them, there was the dress Marilyn Monroe wore while singing Happy Birthday to John F. Kennedy in 1962; the suits worn by the Beatles on the Ed Sullivan Show in 1964; the 1992 Olympics’ US “Dream Team” basketball jerseys; the booking sheet from one of Al Capone’s arrests; a letter from Madonna to Michigan State declining acceptance so she could pursue a music career; guitars of many rock stars, including Bruce Springsteen and Jimi Hendrix; the fedora worn by Humphrey Bogart in Casablanca; the original Terminator costume worn by Arnold Schwarzenegger; and multiple boxing championship belts, Super Bowl rings and Heisman Trophies. (more…)

9 Rules For Risk Management

  
  Education
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Rule No. 1- Do not venture in markets and products you do not understand. You will be a sitting duck.

Rule No. 2- The large hit you will take next will not resemble the one you took last. Do not listen to the consensus as to where the risks are (that is, risks shown by VAR). What will hurt you is what you expect the least.

Rule No. 3- Believe half of what you read, none of what you hear. Never study a theory before doing your own observation and thinking. Read every piece of theoretical research you can-but stay a trader. An unguarded study of lower quantitative methods will rob you of your insight.

Rule No. 4- Beware of the nonmarket-making traders who make a steady income-they tend to blow up. Traders with frequent losses might hurt you, but they are not likely to blow you up. Long volatility traders lose money most days of the week.

Rule No. 5- The markets will follow the path to hurt the highest number of hedgers. The best hedges are those you alone put on. (more…)

Managing the Mind to Stay in the Game

  
  Education
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  • “The creation of bad trades is easy:  trade your opinion, trade big, don’t cut your losses, just hold on and hope.  Bad trades fight trends; they put out a lot money with the risk of making little.  The entry and exit signals for bad trades are hope and fear, with the ego stepping in and refusing to honor the stop loss.”
  • “Dramatic and emotional trading experiences tend to be negative; pride is a great banana peel, as are hope, fear, and greed.  My biggest slipups occurred shortly after I got emotionally involved with positions.”  -Ed Seykota
  • A good trade is taken with complete confidence and follows your trading method; a bad trade is taken on an opinion.
  • A good trade is taken with a disciplined entry and position size; a bad trade is taken to win back losses the market owes you.
  • “Ninety-five percent of the trading errors you are likely to make–causing the money to just evaporate before you eyes–will stem from you attitudes about being wrong, losing money, missing out, and leaving money on the table.”  -Mark Douglas
    • A loss is not when I lose money; it’s when I don’t follow my plan
    • Turn down the heat when you are getting smoked (pare back position size, trade smaller in a drawdown)
  • A good trade is taken when your entry parameters line up; a bad trade is taken out of fear of missing a move
  • A good trade is taken to be profitable in the context of your trading plan; a bad trade is taken out of greed to make a lot of money quickly.
  • A good trade is taken according to your trading plan; a bad trade is taken to inflate the ego.
  • A good trade is taken without regret or internal conflict; a bad trade is taken when a trader is double-minded.

10 Characteristics Among Successful Traders

  
  Education
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1) The amount of time spent on their trading outside of trading hours (preparation, reading, etc.);

2) Dedicated periods to reviewing trading performance and making adjustments to shifting market conditions;

3) The ability to stop trading when not trading well to institute reviews and when conviction is lacking;

4) The ability to become more aggressive and risk taking when trading well and with conviction;

5) A keen awareness of risk management in the sizing of positions and in daily, weekly, and monthly loss limits, as well as loss limits per position;

6) Ongoing ability to learn new skills, markets, and strategies;

7) Distinctive ways of viewing and following markets that leverage their skills;

8) Persistence and emotional resilience: the ability to keep going in the face of setback;

9) Competitiveness: a relentless drive for self-improvement;

10) Balance: sources of well-being outside of trading that help sustain energy and focus.

30 One Liner For Traders -Must Read

  
  Education
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1. Buying a weak stock is like betting on a slow horse. It is retarded.

2. Stocks are only cheap if they are going higher after you buy them

 3. Never trust a person more than the market. People lie, the market does not.

4. Controlling losers is a must; let your winners run out of control.

5. Simplicity in trading demonstrates wisdom. Complexity is the sign of inexperience.

6. Have loyalty to your family, your dog, your team. Have no loyalty to your stocks.

7. Emotional traders want to give the disciplined their money.

8. Trends have counter trends to shake the weak hands out of the market

. 9. The market is usually efficient and can not be beat. Exploit inefficiencies.

10. To beat the market, you must have an edge. (more…)

Traders Should Control These 14 Emotions

  
  Education
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14-POINTS
 

Anger- Revenge trading

Fear- Inability to take an entry or hold a winner in a trend.

Disgust- Can lead to loss of a traders confidence.

Happiness- Surprisingly can lead to trading too big and taking on too many positions.

Sadness- Can lead to having difficulty taking the next trade entry or cutting a loss.

Surprise- Can many times lead to making decisions based on emotions and abandoning a trading plan. (more…)

Perfection in Trading :Anirudh Sethi

  
Analysis, Education
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Image result for perfectionBeing perfect is certainly not easy. Perfection is debatable, and needless to say, as challenging as can be. Matters become increasingly difficult when this is attributed to a trading environment or situation. Many traders end up setting their trades by focusing on what they want the results to be. They focus on the outcome of the trade, and do not give a lot of attention to the actual execution of that trade. This is in fact one of the main reasons why trading is so difficult. A trader can never hope to be perfect in his or her decisions. And, one can never hope for a perfect scenario, where any decision that is made results in a favorable result. Therefore the general rule of thumb that traders need to appreciate and get used to is that they need to perfect the decision making process and the execution of the trade, rather than hoping to make the results perfect. The choices, research, knowledge and information discerned are the steps that need to be perfected in the hope of perfecting the results of the trade in question.

Perfection also revolves around another issue in trading. The vast majority of traders worry a great deal about the outcome of their trading decisions. They experience a fear of losing out, and they do not want to risk a lot of their money either. They realize that in trading it is practically impossible to be perfect, and no matter how many years pass, and how many trades they do, they are still going to end up being imperfect.

Moreover, especially in the case of novice traders, it is normal to think that being a trader is a somewhat simple way to make money. They see the future as being rewarding and profitable – typically, a perfect way to become rich. Yet, they tend to underestimate the risks involved in trading and the various issues that revolve around making sound trading decisions and choices. (more…)

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