Trading Notes for Traders

Traders should work on replacing subjectivity with cut and dry analysis.

Keep yourself in a box and stick with what you know.

The markets are complicated enough without our tendency to over analyze.  All a trader needs is to learn how to read a small number of indicators and trade them well.  Find a niche; your own niche. Simplification not complication makes a successful trader.

When contemplating a trade think first and foremost about how much you are willing to lose before you attempt to calculate your expected gain.

A stock is, at any given time, in the process of testing a specific price level.

Questions that make a trading decision valid:  WHY are you considering a trade? WHEN will you enter it? WHERE do you see it going?

Multiple time frame correlation is important for high probability trades.

Let the chart tell you its story.

OBEY your rules of engagement…ALWAYS.

Be well paid to be a follower.

Loss of mental capital (drive, will, confidence) is greater than loss of monetary capital.

Let the price action CONFIRM your trade analysis.  Example: let a break-out test the break-out first.

Trading Errors:  The “Fudge” Factor

1. Trying to catch a falling knife.

2. Picking Tops

3. Failure to wait for confirmation.

4. Lack of patience.

5.  Lack of a clear strategy.

6. Failure to assume responsibility.

7.  Failure to quantify risk.

The 10 Best things Steve Jobs Ever Said

How did one of the greatest entrepreneurs of the last 50 years think? How did he create one of the most successful companies of all time? Here are ten of the best things that he ever said . I believe they give us clues at identifying the next company that could have their stock become the monster stock of this decade.  As you read through these quotes does it make any other company come to mind besides Apple?

Steve Jobs Quotes:

“We’re gambling on our vision, and we would rather do that than make “me too” products. Let some other companies do that. For us, it’s always the next dream.” Interview about the release of the Macintosh (24 January 1984)

“Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world? ” A comment he made in persuading John Sculley to become Apple’s CEO.

“You‘ve got to start with the customer experience and work back toward the technology – not the other way around.” May 1997, World Wide Developers Conference

“Being the richest man in the cemetery doesn’t matter to me … Going to bed at night saying we’ve done something wonderful… that’s what matters to me.”

“That’s been one of my mantras — focus and simplicity. Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.” –BusinessWeek Interview May 1998

“It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.” –BusinessWeek Interview May 1998

“Innovation distinguishes between a leader and a follower.”

“Quality is more important than quantity. One home run is much better than two doubles.”

“You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.” Inc Magazine

“Stay Hungry. Stay Foolish.”

Wisdom from Market Wizards

Tony Saliba

“How do you lose money? It is either bad day trading or a losing position. If it’s a bad position that is the problem, then you should just get out of it.”

“Clear thinking, ability to stay focused, and extreme discipline. Discipline is number one: Take a theory and stick with it. But you also have to be open-minded enough to switch tracks if you feel that your theory has been proven wrong. You have to be able to say, “My method worked for this type of market, but we are not in that type of market anymore.”

“Until recently, I set goals on a monetary level. First, I wanted to become a millionaire before I was thirty. I did it before I was twenty-five. Then I decided I wanted to make so much a year, and I did that. Originally, the goals were all numbers, but the numbers are’t so important anymore. Now, I want to do some things that are not only profitable, but will also be fun.”

Dr Van K. Tharp

“The composite profile of a losing trader would be someone who is highly stressed and has little protection from stress, has a negative outlook on life and expects the worst, has a lot of conflict in his/her personality, and blames others when things go wrong. Such a person would not have a set of rules to guide their behaviour and would be more likely to be a crowd follower. In addition, losing traders tend to be disorganized and impatient. Thet want action now. Most losing traders are not as bad as the composite profile suggest. They just have part of the losing profile.” (more…)

The composite of a losing trader

loser-traderThe composite of a losing trader would be someone who is highly stressed and has little protection from stress, has a negative outlook on life and expects the worst, has a lot of conflict in her/her personality, and blames others when things go wrong. Such a person would not have a set of rules to guide their behavior and would be more likely to be a crowd follower. In addition, losing traders tend to be disorganized and impatient.

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