Archives of “Human Interest” tag

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17 Trading Maxims For Traders

  
  Education
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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.

Success

  
  Education
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Success does not come from having one’s work recognised by others. It is the fruit of the seed that you lovingly planted.

When harvest time arrives, you can say to yourself: ‘I succeeded.’

You succeeded in gaining respect for your work because you did not work only to survive, but to demonstrate your love for others.

You managed to finish what you began, even though you did not foresee all the traps along the way. And when your enthusiasm waned because of the difficulties you encountered, you reached for discipline. And when discipline seemed about to disappear because you were tired, you used your moments of repose to think about what steps you needed to take in the future.
You were not paralyzed by the defeats that are inevitable in the lives of those who take risks. You didn’t sit agonising over what you lost when you had an idea that didn’t work.
You didn’t stop when you experienced moments of glory, because you had not yet reached your goal.
And when you  have to ask for help, you did not feel humiliated. And when you learned that someone needed help, you showed them all that you had learned, without fearing that you might be revealing secrets or being used by others.
To him who knocks, the door will open.
He who asks will receive.
He who consoles knows that he will be consoled.

Trading happiness

  
  Education
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“I spend my day trying to make myself as happy and relaxed as I can be. If I have positions going against me, I get right out; if they are going for me, I keep them.”

Paul Tudor Jones

A loss never bothers me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does damage to the pocketbook and to the soul.”

Jesse Livermore

Richard Feynman on “Price” Importance

  
  Education
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Trend followers trade the “price”. It’s the number that can’t be faked, the real indicator of the past, now and the future. Richard P. Feynman adds:

“You can know the name of a bird in all the languages of the world [think of all those so-called market fundamentals], but when you’re finished, you’ll know absolutely nothing whatever about the bird…So let’s look at the bird and see what it’s doing — that’s what counts.”

What is the market doing right now? That’s what counts. The price.

The price

Be Imperfect

  
  Education
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As a trader – or an investor – you will not be right all of the time. If you can accept your imperfection, and work within it, you will be much more successful:

If you have a perfectionist mentality when trading, you are setting yourself up for failure, because it is a “given” that you will experience losses along the way. You must begin to think of trading as a game of probability. Your losses ( that you hope will return to breakeven) will kill you. If you cannot take a loss when it is small ( because of the need to be perfect), then you will watch that small loss grow into a larger loss and so on into a vicious cycle of more and more pain for the perfectionist. Trading on hope does not work. The markets can remain irrational for a lot longer than you can remain solvent.

The object should be excellence in trading, not perfection. Moreover, it is essential to strive for excellence over a sustained period, as opposed to judging that each trade must be excellent. This is a marathon…not a sprint.

The greatest traders know how to take cut losses and let winning positions run. Perfectionists often do exactly the opposite. They get in at the wrong time, stay in too long and then get out the wrong time. Perfectionists are always striving and never arriving. The market will find the flaw in a perfectionistic trader and exploit it day after day.

During and After the Trade- 16 POINTS

  
  Education
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1. What’s your game plan if it goes against you and threatens your survival?

2. Will you be able to get out? Did you take that into account in your workout?

3. More typically, what will you do if it goes way against you and then meanders back to give you a breakeven? Or if it immediately goes for you or aginst you?

4. Would you be willing to take a ½% profit if you get it in the first 10 minutes?

5. Did you test whether taking small opportunistic profits turns a winning system into a bad one?

6. How will unexpected cardinal events affect you like the “regrettably,” or the pre-annnouncement of something you expected for the next open? And what happens if you’re trading an individual stock and the market goes up or down a few percent during the day, or what’s the impact of a related move in oil or interest rates?

7. Are you sure that you have to monitor the trade during the day? If you’re using stops, then you probably don’t have to but then your position size would have to be reduced so much that your chances of a reasonable profit taking account of vig are close to zero. If you’re using 10% of your capital on a trade, they you’ll have to monitor it for survival. But, but, but. Are you sure you won’t be called away by phone calls, or the others?

8. Are you at equilibrium in your personal life? You’re not as talented as Tiger Woods, and you probably won’t be able to handle distressed calls for money or leaks on the home front. Are you sure that if you’re losing you won’t get hit on the head with a 7-iron, or berated until you have to give up at the worst possible time? (more…)

Secret to trading success: You

  
  Education
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“You are the weakest part of your system”. That is a defeatist statement and completely untrue. It makes your expectation to fail easier to accomplish and more importantly it makes failure easier to handle. It shifts the pressure away from you and unto fate.

Would you fly on an airline if their motto was “Our pilots are the weakest part.” I do not think so. You are your system. Even if your system is automated you added the inputs, parameters.

Taking responsibility for your action is not easy. Taking control of the outcomes of trading or life is a huge responsibility. You will have moments of weakness, but you are not weak. The market does not go straight up and either does the road to success.

Thoughts of Market Wizard Gary Bielfeldt

  
  Education
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Discipline

I like to think of myself as very disciplined when it comes to sticking to my system. However, after my recent selling, I have started to question how disciplined I really am. I keep making changes to my system that I think are improvements, but is that just a lack of discipline to stick to the original plan? Also, just because I am more disciplined than most of the people I know doesn’t mean that I have enough discipline to trade successfully.”

Patience

Patience is probably my weakest of these five traits. For as long as I can remember I have never really been patient about anything. My trading is no different. I I have chased after extended stocks as well as bought too soon because I was afraid that the market was going to take off without me. I need to work on this more than anything else.

Courage

This is an area that I have improved in tremendously over the past 18 months. I have found that the combination of more knowledge and more experience have given me greatly increased confidence in my purchases. This has allowed me to feel more comfortable when I establish new positions. (more…)

THREE LEGS OF SUCCESSFUL TRADING

  
  Education
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If you ever read any book on trading you would notice that every author our there talking about three most important things of successful trading and investing are:

  1. Trading edge
  2. Money management
  3. Discipline or psychology

Depending on the book one is reading one of those three are emphasized more or less. If you read book on technical analysis author will say that having edge is most important, and even if you have PhD in psychology if you don’t have proper edge you will not be able to make money.

If you read book on psychology again author will tell you that you can have best trading system on the world if you are not able to take signals you will not be successful trader and that you must make system that will suit your personality.

Finally if you read book on money management, author will tell you that even if you have best system in the world and having best discipline in the world if you risk too much of your capital on each trade you will probably ruin your account and the game will be over.

That post made me think about is it really like that, can we represent those three characteristic as pyramid. Is one more important than the other?
(more…)

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