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10 Things I’ve Learned About Markets

  
Analysis, Education
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1. “There is no such thing as easy money”

2. Events that you think are affected by cardinal announcements like the employment numbers at 8:30 am on Friday are often known to many participants before the announcement

3. Markets that have little liquidity are almost impossible to profit from.

4. When the stock market is way down, policy makers take notice and do what they can to remedy the situation.

5. The market puts infinitely more emphasis on ephemeral announcements that it should.

6. It is good to go against the trend followers after they have become committed.

7. The one constant, is that the less you pay in commissions, and bid asked spread, the more money you’ll end up with at end of day. Too often, a trader makes a fortune on the prices showing when he makes a trade, and ends up losing everything in the rake and grind above.

8. It is good to take out the canes and hobble down to wall street at the close of days when there is a panic.

9. A meme about the relation between today’s events and those of x years ago is totally random but it is best not to stand in the way of it until it is realized by the majorit of susceptibles

10. All higher forms of math and statistics are useless in uncovering regularities.

The Top 10 Mistakes Traders Make

  
  Education
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1. Failure to have a trading plan in place before a trade is executed.
A trader with no specific plan of action in place upon entry into a futures trade does not know, among other things, when or where he or she will exit the trade, or about how much money may be made or lost. Traders with no pre-determined trading plan are flying by the seat of their pants, and that’s usually a recipe for a “crash and burn.”

2. Inadequate trading assets or improper money management.
It does not take a fortune to trade futures markets with success. Traders with less than $5,000 in their trading accounts can and do trade futures successfully. And, traders with $50,000 or more in their trading accounts can and do lose it all in a
heartbeat. Part of trading success boils down to proper money management and not gunning for those highly risky “home-run” type trades that involve too much trading capital at one time.

3. Expectations that are too high, too soon.
Beginning futures traders that expect to quit their “day job” and make a good living trading futures in their first few years of trading are usually disappointed. You don’t become a successful doctor or lawyer or business owner in the first
couple years of the practice. It takes hard work and perseverance to achieve success in any field of endeavor — and trading futures is no different. Futures trading is not the easy, “get-rich-quick” scheme that a few unsavory characters make it out to be. (more…)

Wise quotes from Bernard M. Baruch

  
  Education
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263-1Wise quotes from Bernard M. Baruch:
Bernard Baruch was a stock market speculator who became a millionaire by age 30 in the early 1900’s and eventually a statesman and advisor to multiple Presidents during WWI and WWII.

  • -A speculator is a man who observes the future, and acts before it occurs.
  • -If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he is wrong.
  • -During my eighty-seven years I have witnessed a whole succession of technological revolutions. But none of them has done away with the need for character in the individual or the ability to think.
  • -Age is only a number, a cipher for the records. A man can’t retire his experience. He must use it. Experience achieves more with less energy and time.
  • Do not blame anybody for your mistakes and failures.
  • Every man has a right to his opinion, but no man has a right to be wrong in his facts.
  • I made my money by selling too soon.
    I never lost money by turning a profit.
  • Most of the successful people I’ve known are the ones who do more listening than talking.
  • Never pay the slightest attention to what a company president ever says about his stock.
  • Whatever failures I have known, whatever errors I have committed, whatever follies I have witnessed in private and public life have been the consequence of action without thought.

Market Wisdom from Bernard Baruch

  
  Education
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You don’t read a lot about Bernard Baruchanymore, but his teachings about the market are useful today as they always have been. There are several good books about him including his own“Baruch: My Own Story” which I recommend highly especially for those of you looking for a book to take with you on your summer vacations.

Although I’ve provided several quotes from Bernard Baruch through the years, here are some notes that I’ve taken from reading about him and his market wisdom. Enjoy!

    • Baruch started out as most traders do – i.e. losing lots of money because he lacked the knowledge, experience, & discipline. “You have to lose money in order to better yourself.”
      • Real success in the market takes time and money. Unfortunately “most people view the market as the place where the miracle of great and quick riches can be performed with little effort.”
        • Overtrading and holding too many positions in his early years caused Baruch to go broke many times before he developed the discipline to succeed.
          • A successful speculation is “a man who observes the future and acts before it occurs.” Acting swiftly in the market is important.
            • After losing money from the recommendation of others, Baruch focused himself on the facts. “One must search through a maze of complex and contradictory details to get to the significant facts…..Then he must be able to operate coldly, clearly, and skillfully on the basis of those facts.” The challenge for the successful speculator is “how to disentangle the cold hard facts from the rather warm feelings of the people dealing with the facts.” Moreover, “if you get all the facts, your judgment can be right; if you don’t get all the facts, it can’t be right.” (more…)

            Today I know that …

              
              Education
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            mylessonsMy lessons may have been costly ,but they brought with them a kind of undertstanding more precious than gold.

            😆 Playing the market is much different from being an investor.

            😆 Pride is another word for stupidity if you claim credit for profits temporarily created by a bull market run wild.

            😆 Paper profits are the illision of wealth created by the myopia of greed.

            😆 Margin is a secuctive temptress more enticing than Delilah-and far more dangerous.

            😆 Money doesn’t make people better ;it just allows them to become kinder and more charitable.

            😆 Losing money doesn’t mean you’re a fool ,just as making a fortune doesn’t prove you’re a genius.

            😆 Maturity means knowing how to cope with failure-and with sucess.

            😆 The market respects those who treat is seriously and research it thoroughly ;it mocks those who think its rewards are freely granted to the followers of friendly tips and exicted phone calls from “helpful” strangers.

            😆 Just as in every other game of chance ,all of your winning should never be left on the table.

            😆 The law of gravity was not repealed for the sake of Dalal street ;even there the rule still holds that “whatever goes up must come down .”

            😆 Forgiveness is a virtue even to myself ;I can forgive the fact that I failed-because I know that Iam not a failure.

             

            9 Lessons From The Greatest Trader Who Ever Lived

              
              Education
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            One of the good guys (for me, at least) has always been Jesse L. Livermore. He’s considered by many of today’s top Wall Street traders to be the greatest trader who ever lived.
            Leaving home at age 14 with no more than five bucks in his pocket, Livermore went on to earn millions on Wall Street back in the days when they still literally read the tape.
            Long or short, it didn’t matter to Jesse.
            Instead, he was happy to take whatever the markets gave him because he knew what every good trader knows: Markets never go straight up or straight down.
            In one of Livermore’s more famous moves, he made a massive fortune betting against the markets in 1929, earning $100 million in short-selling profits during the crash. In today’s dollars, that would be a cool $12.6 billion.
            That’s part of the reason why an earlier biography of his life, entitled Reminiscences of a Stock Operator, has been a must-read for experienced traders and beginners alike.
            A gambler and speculator to the core, his insights into human nature and the markets have been widely quoted ever since.
            Here are just a few of his market beating lessons: 

            On the school of hard knocks:

            The game taught me the game. And it didn’t spare me rod while teaching. It took me five years to learn to play the game intelligently enough to make big money when I was right.

            On losing trades:

            Losing money is the least of my troubles. A loss never troubles me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does the damage to the pocket book and to the soul.

            On trading the trends:

            Disregarding the big swing and trying to jump in and out was fatal to me. Nobody can catch all the fluctuations. In a bull market the game is to buy and hold until you believe the bull market is near its end. (more…)

            11 Things I’ve Learned About Markets

              
              Education
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            1. “There is no such thing as easy money”

            2. Events that you think are affected by cardinal announcements like the employment numbers at 8:30 am on Friday are often known to many participants before the announcement

            3. It’s bad to try to make money the same way several days in a row

            4. Markets that have little liquidity are almost impossible to profit from.

            5. When the stock market is way down, policy makers take notice and do what they can to remedy the situation.

            6. The market puts infinitely more emphasis on ephemeral announcements that it should.

            7. It is good to go against the trend followers after they have become committed.

            8. The one constant, is that the less you pay in commissions, and bid asked spread, the more money you’ll end up with at end of day. Too often, a trader makes a fortune on the prices showing when he makes a trade, and ends up losing everything in the rake and grind above.

            9. It is good to take out the canes and hobble down to wall street at the close of days when there is a panic.

            10. A meme about the relation between today’s events and those of x years ago is totally random but it is best not to stand in the way of it until it is realized by the majorit of susceptibles

            11. All higher forms of math and statistics are useless in uncovering regularities.

            Jesse Livermore: Preparation And Experience Is Required For Success

              
              Education
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            “Of course the same things happen in all speculative markets. The message of the tape is the same. That will be perfectly plain to anyone who will take the trouble to think. But people never take the trouble to ask questions, leave alone seeking answers. The one game of all games that really requires study before making a play is the one he goes into without his usual highly intelligent preliminary and precautionary doubts. He will risk half his fortune in the stock market with less reflection than he devotes to the selection of a medium-priced automobile.”

            Keep a Cash Reserve & Be Patient

              
              Education
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            There are times when playing the stock mar­ket that your money should be inactive – waiting on the sidelines in cash – waiting to come into play.

            In the stockmarket – time is not money – time is time ­and money is money.
            Often money that is just sitting can later be moved into the right situation at the right time and make a vast fortune – patience – patience.

            Patience is the key to success not speed.
            Time is a cunning speculator’s best friend if he uses it right.

            Remember the clever speculator is always patient and has a reserve of cash.

            Jesse Livermore

            6 Mistakes Traders Make

              
              Education
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            1. Failure to have a trading plan in place before a trade is executed. A trader with no specific plan of action in place upon entry into a futures trade does not know, among other things, when or where he or she will exit the trade, or about how much money may be made or lost. Traders with no pre-determined trading plan are flying by the seat of their pants, and that’s usually a recipe for a “crash and burn.”

            2. Inadequate trading assets or improper money management. It does not take a fortune to trade futures markets with success. Traders with less than $5,000 in their trading accounts can and do trade futures successfully. And, traders with $50,000 or more in their trading accounts can and do lose it all in a heartbeat. Part of trading success boils down to proper money management and not gunning for those highly risky “home-run” type trades that involve too much trading capital at one time.

            3.Expectations that are too high, too soon. Beginning futures traders that expect to quit their “day job” and make a good living trading futures in their first few years of trading are usually disappointed. You don’t become a successful doctor or lawyer or business owner in the first couple years of the practice. It takes hard work and perseverance to achieve success in any field of endeavor–and trading futures is no different. Futures trading is not the easy, “get-rich-quick” scheme that a few unsavory characters make it out to be.

            4.Failure to use protective stops. Using protective buy stops or sell stops upon entering a trade provide a trader with a good idea of about how much money he or she is risking on that particular trade, should it turn out to be a loser. Protective stops are a good money-management tool, but are not perfect. There are no perfect money-management tools in futures trading. (more…)

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