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Habits of Incredibly Successful People

Extraordinary people have extraordinary habits. Here are few I’ve noticed. 

Dilbert creator Scott Adams doesn’t use goals. He uses systems instead 

Adams writes in his book How to Fail at Almost Everything:

A system is something you do on a regular basis that increases your odds of happiness in the long run. If you do something every day, it’s a system. If you’re waiting to achieve it someday in the future, it’s a goal.

The system-versus-goals model can be applied to most human endeavors. In the world of dieting, losing twenty pounds is a goal, but eating right is a system. In the exercise realm, running a marathon in under four hours is a goal, but exercising daily is a system. In business, making a million dollars is a goal, but being a serial entrepreneur is a system.

When Charlie Munger was a lawyer, he saved the most productive hour of the day for himself

Munger explained:

I would sell the best hour of the day to myself. And only after improving my mind — only after I’d used my best hour improving myself — would I sell my time to my professional clients. I did that for a number of years.

Nikola Tesla designed complicated inventions in his head before tinkering

He explained: (more…)

7 Points For Traders-Must Read

  1. The trader must have the discipline to take the system’s entries and exits.

  2. The trader must have the discipline to take the stop loss on a losing trade when it is hit and not keep holding and start hoping.
  3. No matter the method the trader has to manage risk through proper position sizing, getting greedy and trading too big will blow up even the best systems.
  4. It is the trader that must have the perseverance to stick to the method even during losing periods, and also stick with trading until success is reached.
  5. If a trader can not manage their mind then the stress will break them, I have seen this happen many times. If you can’t handle losing you can’t trade.
  6. The trader must find a robust method, must understand why it has an edge, and must believe in their methodology.
  7. The trader has to know themselves and trade the method that fits their risk tolerance levels and own psychology.

The good news is that if none of these error fit you when you lose money in a trade then the market was just not conducive to your methodology, and it is not your fault so don’t dwell on it.

Murphy's Lesser Known Laws.

1. Light travels faster than sound. This is why some people appear bright until you hear them speak.

2. He who laughs last, thinks slowest.

3. Change is inevitable, except from a vending machine.

4. Those who live by the sword, get shot by those who don’t.

5. Nothing is foolproof to a sufficiently talented fool.

6. The 50-50-90 rule: Anytime you have a 50-50 chance of getting something right, there’s a 90% probability you’ll get it wrong.

7. If you lined up all the cars in the world end to end, someone would be stupid enough to try to pass them, five or six at a time, on a hill, in the fog.

8. If the shoe fits, get another one just like it.

9. The things that come to those who wait will be the things left by those who got there first. (more…)

12 Keys of Successful Traders

  1. Their entry parameters have a historical edge that gives them a real probability of profitability.

  2. They are profitable becasue their winning trades are bigger than their losing trades over long periods of time. This is either due to a high winning percentage or really big wins when they are right.
  3. The successful traders know how to exit with a profit while it is still there.
  4. Successful traders are not stubborn they flow with the market price action.
  5. Successful traders winning trades can be as big as the trend will allow but their losses are strictly limited to a very small percent of their trading capital.
  6. Traders that trade the math and not their emotions are the ones that make money in the markets.
  7. The traders that limit their total risk exposure at any time do better over the long term. Big draw downs are very difficult to come back from. (more…)

Active Traders-Must Read These 42 Points

What if you could read the principles for success for some of the world’s greatest traders? Well you can, here is how author Jack Schwager summed up the the similarities of the ‘Market Wizards’ he spent years interviewing in his second book.

The following is an summarized excerpt from Jack D Schwager’s book, The New Market Wizards. I highly recommend this book for all active traders.

  1. First Things First
    You sure you really want to trade ? It is common for people who think they want to trade to discover that they really don’t.
  2. Examine Your Motives
    Why do you really want to trade ? Did you say excitement ? Then don’t waste your money in market, you might be better off riding a roller coaster or taking up hand gliding.
    The market is a stern master. You need to do almost everything right to win. If parts of you are pulling in opposite directions, the game is lost before you start.
  3. Match The Trading Method To Your Personality
    It is critical to choose a method that is consistent with your your own personality and conflict level.
  4. It Is Absolutely Necessary To Have An Edge
    You cant win without an edge, even with the world’s greatest discipline and money management skills. If you don’t have an edge, all that money management and discipline will do for you is to guarantee that you will gradually bleed to death. Incidentally, if you don’t know what your edge is, you don’t have one.
  5. Derive A Method
    To have an edge, you must have a method. The type of method is not important, but having one is critical-and, of course, the method must have an edge.
  6. Developing A Method Is Hard Work
    Shortcuts rarely lead to trading success. Developing your own approach requires research, observation, and thought. Expect the process to take lots of time and hard work. Expect many dead ends and multiple failures before you find a successful trading approach that is right for you. Remember that you are playing against tens of thousands of professionals. Why should you be any better ? If it were that easy, there would be a lot more millionaire traders.
  7. Skill Versus Hard Work
    The general rule is that exceptional performance requires both natural talent and hard work to realize its potential. If the innate skill is lacking, hard work may provide proficiency, but not excellence.
    Virtually anyone can become a net profitable trader, but only a few have the inborn talent to become supertraders ! For this reason, it may be possible to teach trading success, but only upto a point. Be realistic in your goals.
  8. Good Trading Should Be Effortless
    Hard work refers to the preparatory process – the research and observation necessary to become a good trader – not to the trading itself.
    “In trading, just as in archery, whenever there is effort, force, straining, struggling, or trying, it’s wrong. You’re out of sync; you’re out of harmony with the market. The perfect trade is one that requires no effort.”
  9. Money Management and Risk Control
    Money management is even more important than the trading method. 

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17 Trading Maxims For Traders

1  Accept the fact that some days you’re the pigeon, and some days you’re the statue!

2  Always keep your words soft and sweet, just in case you have to eat them.

3  Always read stuff that will make you look good if you die in the middle of it.

4  Drive carefully… It’s not only cars that can be recalled by their Maker.

5  If you can’t be kind, at least have the decency to be vague.

6  If you lend someone $20 and never see that person again, it was probably worth it.

7 It may be that your sole purpose in life is simply to serve as a warning to others.

8  Never buy a car you can’t push.

9  Never put both feet in your mouth at the same time, because then you won’t have a leg to stand on.

10  Since it’s the early worm that gets eaten by the bird, sleep late.

11  The second mouse gets the cheese.

12  When everything’s coming your way, you’re in the wrong lane.

13  Birthdays are good for you. The more you have, the longer you live.

14  You may be only one person in the world, but you may also be the world to one person.

15  Some mistakes are too much fun to make only once.

16  We could learn a lot from crayons. Some are sharp, some are pretty and some are dull. Some have weird names and all are different colors, but they all have to live in the same box.

17  A truly happy person is one who can enjoy the scenery on a detour.

4-Hour Body Principles in Trading

I was reading The 4-Hour Body by Tim Ferriss and found two quotes that are highly applicable to trading:

On psychology:

Does that mean [the workout routine] won’t work for some people? No, it just means that it will fail for most people. We want to avoid all methods with a high failure rate, even if you believe you are in the diligent minority. In the beginning everyone who starts a program believes they’re in this minority.
Take adherence seriously: will you actually stick with this change until you hit your goal?
If not, find another method, even it it’s less effective and less efficient.

On listening to others:

Everyone you meet (every male, at least) will have a strong opinion about how you should train and eat. for the next two to four weeks, cultivate selective ignorance and refuse to have bike-shed discussions with others. Friends, foes, colleagues, and well-intentioned folks of all stripes will offer distracting and counterproductive additions and alternatives.

Nod, thank them kindly, and step away to do what you’ve planned. Nothing more and nothing different.