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Five Rules for Traders

  
  Education
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You can avoid the emotionalism, the second guessing, the wondering, the agonizing, if you have a sound trading plan (including price objectives, entry points, exit points, risk-reward ratios, stops, information about historical price levels, seasonal influences, government reports, prices of related markets, chart analysis, etc.) and follow it. Most traders don’t want to bother, they like to ‘wing it.’ Perhaps they think a plan might take the fun out of it for them. If you’re like that and trade futures for the fun of it, fine. If you’re trying to make money without a plan-forget it. Trading a sound, smart plan is the answer to cutting your losses short and letting your profits run.

Do not overstay a good market. If you do, you are bound to overstay a bad one also.

Take your lumps, just be sure they are little lumps. Very successful traders generally have more losing trades than winning trades. They don’t have any hang-ups about admitting they’re wrong, and have the ability to close out losing positions quickly.

Program your mind to accept many small losses. Program your mind to ‘sit still’ for a few large gains.

Recognize that fear, greed. ignorance, generosity, stupidity, impatience. self-delusion, etc., can cost you a lot more money than the market(s) going against you, and that there is no fundamental method to recognize these factors.

10 Money Lessons from Billionaires

  
Analysis, Education
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Billionaires have changed the way our world works. They’ve altered the way we communicate, travel, and live. And along the way, they have made incredible amounts of money for their efforts.

 Learning from the 10 billionaires below is not only a good idea if you want to boost your bank account, but also if you want your work to make a difference.

With that in mind, here are 10 lessons from billionaires on earning money, succeeding in business, and finding happiness in life.

1. “You become what you believe. You are where you are today in your life based on everything you have believed.” —Oprah Winfrey, net worth of $2.7 billion

First and foremost, you have to believe that greatness is possible. Many of the world’s billionaires have shifted the way our world works, because they believed that they were capable of doing something that was previously impossible.

Change is possible. Greatness is possible. But you can’t do anything unless you first believe in yourself.

2. “What we say here every day is that our success is really based on our members’ success, our community’s success.” —Pierre Omidyar, net worth of $6.7 billion

Your success is directly tied to how much you do for others. It’s not what you know. It’s not who you know. It’s what you do for who you know. Success follows generosity.

3. “The typical human life seems to be quite unplanned, undirected, unlived, and unsavored. Only those who consciously think about the adventure of living as a matter of making choices among options, which they have found for themselves, ever establish real self-control and live their lives fully.” —Karl Albrecht, net worth of $25.4 billion (more…)

Learning to Trade from a Legend-Victor Niederhoffer

  
  Education
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Study horse racing books. The odds against winning at a parimutuel racetrack are overwhelming. Yet some touts have systems that produce a profit (against all odds). Can you apply any of these horse racing principles to your trading?

• Write down trading prices (by hand). There were a ton of computers in Victor’s trading room. Yet Victor made me do price analysis by hand. He felt there was enormous virtue about getting close and comfortable with trading figures.

• All markets are related. Learn what a move in bonds does to gold. And to S&P futures or the Japanese yen. Don’t trade markets in isolation

• Only make a trade when the odds are at least 60% in your favor.

• Don’t take losses to heart. I lost $20,000 on a Friday, the first day I traded real money for Victor. I wiped out my trading account. After stewing over my losses all weekend, I offered to resign and refund my losses. Victor refused my resignation and put $20,000 back in my trading account.

• Don’t take wins to heart. I remember making a lot of money following (I thought) Victor’s instructions while he was away. When Victor returned, he was not impressed by the fact the firm made money. He told me that I had traded erroneously and was lucky to have survived my trades.

• Be a mentor. Victor was generous with his time and advice. Despite the fact that several employees exploited his generosity, Victor continued to help new traders.

•  Get out when the trade is over. All trades have a beginning and end (based on time and price). Get out whether you’re winning or losing when the time or price has been met.

• Write down your moves. Learn from your mistakes.

• Learn concentration and game strategy from champions in other disciplines (such as ping-pong and checkers).

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