1. Decide that you want to trade for the long haul. i.e decide that you want to trade 20 years from now.
2. Learn as much as you can. Read, and listen to the experts, but keep a healthy disbelief about everything.
3. Do not be greedy and rush to trade – take your time to learn. The market will be there with many good opportunities in the months and years ahead.
4. Develop a method for analyzing the market, that is, if A happens, B is likely to happen. Markets have many dimensions – use several analytics methods to confirm trades.
5. Develop a money management plan. Your first goal should be of long term survival, second goal, a steady growth of capital and third goal, making high profits.
6. Be aware the trader is the weakest link in the system. Learn how to avoid losses and develop your method of cutting out impulsive trades.
7. Winners think, feel and act differently than loosers. You must look within yourself and strip away the illusions and change your old way of thinking, acting and being. Change is hard, but if you want to be a successful trader, you have to work on changing your personality.
Archives of “Illusions” tag
rss20 Amazing Life Lessons-Steve Jobs
Don’t Wait
When the young Steve Jobs wanted to build something and needed a piece of equipment, he went straight to the source.
“He began by recalling that he had wanted to build a frequency counter when he was twelve, and he was able to look up Bill Hewlett, the founder of HP, in the phone book and call him to get parts.”
Make Your Own Reality
Steve Jobs learned early that when you don’t like how things are in your life or in your world, change them, either through action or sheer force of will.
“As Hoffman later lamented, “The reality distortion field can serve as a spur, but then reality itself hits.” – Joanna Hoffman, part of Apple’s early Macintosh team.
“I didn’t want to be a father, so I wasn’t,” Jobs later said, with only a touch of remorse in his voice.
Control Everything You Can
Steve Jobs was, to a certain degree, a hippie. However, unlike most free spirits of the 1960s-to-1970s love-in era, Jobs was a detail-oriented control freak.
“He wants to control his environment, and he sees the product as an extension of himself.” (more…)
Forecasting the Market
Amateurs attempt to make a forecast while professionals manage information to make decisions based on probabilities. Dr. Alexander Elder compares this to a Doctor that received a patient with a knife stabbed in his chest. The family will ask, “will he survive?” and “when can he go home?” But the Doctor is not forecasting, he must prevent the patient from dying, remove the knife, saturate the organs and carefully watch for an infection. He monitors the health trend of the patient and takes measures to prevent any complications. He is managing, not forecasting. To profit in trading you do not need to forecast the future, you need to derive from the market whether the bulls or bears are in control. You need to practice money management techniques for long term survival. You trade against the sharpest mind in the ocean-like markets. Mental discipline is an undivided part of trading. Please remember the following points: Understand you are in the market for the long term, that you want to be a trader in even 20 years from now Develop your trading strategy, either technical or fundamental analysis. If “x” happens then “y “is therefore likely to take place. You may need different tools for trading a bull or a bear market Develop a money management plan, with the first goal being long term survival. Secondary goal is steady money growth and third goal would be high profits. Successful traders do not concentrate on the profit itself but maintaining successful trades regardless of the earned amount. Winners feel, think and act different than losers. Look inside yourself, eliminate the illusions and change the way you have been thinking and acting. Changing is hard but could pave the way to becoming a successful trader. |
WILLIAM O'NEIL'S STOCK TRADING COMMANDMENTS
Last Night ,Completed reading Trade Like An O’Neil Disciple by Gil Morales and Dr. Chris Kacher. One of the chapters, with a wealth of information, is “Our Bill of Commandments” wherein the authors discuss William O’Neil’s (think IBD) stock trading commandments. I thought it would be worthwhile to list them here.
1. Never Get Carried Away With Yourself. “The basic idea is that one should remain impervious to the illusions and trappings of wealth, as they often lead one to become carried away to the point where excess of one sort or another ultimately leads to one’s demise” (265).
2. Never Operate From a Position of Fear. “If you are fearful in the markets, either as a result of taking a recent loss or some other mistake, or even as a result of being nervous about the level of risk you are taking, then you are putting yourself in the position of making and unclear and hence incorrect decision” (265).
3. You Learn More From Your Enemies Than You Do From Your Friends. Make sure you take the criticism’s of others and use them to your advantage by recognizing that the more others criticize the more you value your own beliefs, trading or otherwise.
4. Never Stop Learning and Improving. Always focus your mistakes and searching for ways to correct them. That way you will not be as tempted to make the same mistake again.
5. Never Talk About Your Stocks. This is purely an ego taming exercise. While I personally believe it is ok to discuss technical analysis and stocks that may be on a watchlist there is really no benefit in bragging about success and hiding your failures. It is ok to be wrong.
6. Don’t Get Giddy at the Top. Bigger charts (such as the WEEKLY) are the best barameters for giddiness. By watching over extended big charts, the trader’s emotions can be better managed thereby avoiding jumping on the caboose as the train is set to take a break from its recent trip.
7. Use Weekly Charts First, Daily Second, and Ignore Intra-day Charts. No need to focus on the noise at the expense of listening to the still, small voice of Mr Market.
8. Find The Big Stock. Look for stocks under accumulation and then begin buying in preparation for distribution.
9. Be Careful Who You Get Into Bed With. Although not a trading rule per se, keeping good, solid company outside the charts, can help you be the best trader inside the charts. “Trust and integrity between two people are the most important variables in life and in business” (269).
10. Always Maintain Insane Focus. Focus “is what makes life worth living, and by relentlessly pursuing our passions we attain the state of insane focus that in turn drives high levels of success” (269).
No matter what you think of O’Neil and his trading strategy, one thing is for certain his commandments are applicable to all of us both in and outside the charts.
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