1. The secret to losing money in the market is to know why. “The losers “were ‘playing the market’, not using it intelligently. The fellow at the other end of the deal, who was using it intelligently, not ‘playing the market’, is the one who got the money.” 2. “It is an undeniable fact that indiscriminate trading in a hectic market will send one to financial oblivion quicker than any other known process.” 3. “The most careful preparation-a systematic plan-is one of the essentials of success.” 4. “Market action is not complex but surprisingly simple. Yet it is often made to appear complex by newspaper forecasters and market letter writers.” 5. “Market action is human nature in action.” 6. All market movements are based on “two deep-seated and entirely natural emotions: the desire for gain and the fear of loss.” 7. “So anxious are people to find some talisman, some magic wand, that will help them secure the hidden riches of the market, that they will try anything from coin-flipping to crystal gazing to secure the desired assistance.” 8. “What marvelous results could be attained in the business of making money if those who buy stocks would take a little time to learn a few simple facts about the market in which they are blindly reposing their faith.” 9. “Market students are continually diverted from making true evaluations of securities and commodities because they study the statistics made by prices instead of the psychology of prices.” 10. “Adopt one system of trading and stick to it, just as you employ and stick to one physician in whom you learn to have confidence.” 11. “One of the most important points in your market education is to learn as early as possible that the customary and supposedly weighty market news is of very small importance. The news only looks important.” 12. “Don’t trade just because you can afford to lose.” 13. “Practice makes perfect is an old copybook adage that works well in the market place.” 14. “If a trade fails to come out right, the error will be found in the operator-not the market.” 15. “Trading is simple another form of business. Treat it as such.” 16. “Trend to the investor is like the vein of gold to the miner, who must follow the vein faithfully if he expects to get the yellow metal.” 17. “Stocks are made to buy and sell…not to be bought and held.” 18. No matter what a thing costs, stocks or otherwise, “it is worth only what you can somebody to pay for it.” 19. People will always be prone to be extravagantly optimistic or dolefully in the slumps and “in this action is unlimited wealth for the men who realize this fact and will use it with confidence and decision.” 20. “Success is the most desirable thing in the world, but it is an eliminating contest. It may trample the thoughtless trader into the dust, but it will pour large treasure into the laps of those who work in sincere harmony with its laws.” |
Archives of “little time” tag
rss10 Ways to Move From Peril to Profits
- The first question to ask in any option trade is how much of my capital could I lose in the worst case scenario not how much can I make.
- Long options are tools that can be used to create asymmetric trades with a built in downside and unlimited upside.
- Short options should only be sold when the probabilities are deeply in your favor that they will expire worthless, also a small hedge can pay for itself in the long run.
- Understand that in long options you have to overcome the time priced into the premium to be profitable even if you are right on the direction of the move.
- Long weekly deep-in-the-money options can be used like stock with much less out lay of capital.
- The reason that deeper in the money options have so little time and volatility priced in is becasue you are ensuring someones profits in that stock. That is where the risk is:intrinsic value, and that risk is on the buyer.
- When you buy out-of-the-money options understand that you must be right about direction, time period of move, and amount of move to make money. Also understand this is already priced in.
- When trading a high volatility event that price move will be priced into the option, after the event the option price will remove that volatility value and the option value will collapse. You can only make money through those events with options if the increase in intrinsic value increases enough to replace the vega value that comes out.
- Only trade in options with high volume so you do not lose a large amount of money on the bid/ask spread when entering and exiting trades.
- When used correctly options can be tools for managing risk, used incorrectly they can blow up your account. I suggest never risking more than 1% of your trading capital on any one option trade.
16 Rules for Thirsty Traders
I always liked these rules for their simplicity and I think they can benefit some of you, if only in the form of a gentle reminder of what you should be doing…or not doing.
1. Market direction is the most important thing in determining a stock’s
probable direction.
2. Price and Volume action are more important than a jillion indicators and
complex theories, no matter how cool they may be.
3. Don’t miss the forest (broad market) for the trees (individual stocks).
4. Don’t anticipate. Wait for confirmation.
5. Don’t trade contrary to the market’s direction.
6. Don’t try to “outsmart” the market.
7. Things can go much, MUCH further than you think they can, in either
direction.
8. Divergences work best with double tops and double bottoms.
9. Quite often, divergence analysis doesn’t work at all. When that happens, it
means the prevailing trend is very strong.
10. You need to effectively filter or limit the amount of data or charts to look
at; otherwise, you will spread yourself way too thin. You must have the time and
alertness to keep your eye on the ball…..hard to do, when you are juggling
thousands.
11. Don’t focus on every tick of each trade. If you are, you are holding on to
the handlebars too tight.
12. Have a plan. Set stops and targets. Don’t be afraid to take 1/2 profits and
raise (or lower) your stops. If your trade follows your script, great. If it
doesn’t within a reasonable time, consider getting out.
13. That said, it’s OK to give your trade a little time, unless you are clearly
wrong. You are often ahead of the market a little bit.
14. You will lose money sometimes. Every trader does. It’s a business, not a
personal indictment against you. Get over it and move on to the next trade.
15. Political opinion and markets do not mix.
16. Learn from your mistakes, or you will be condemned to repeat them.
Sixty Ways To Make Life Simple Again
- Don’t try to read other people’s minds. Don’t make other people try to read yours. Communicate.
- Be polite, but don’t try to be friends with everyone around you. Instead, spend time nurturing your relationships with the people who matter most to you.
- Your health is your life, keep up with it. Get an annual physical check-up.
- Live below your means. Don’t buy stuff you don’t need. Always sleep on big purchases. Create a budget and savings plan and stick to both of them.
- Get enough sleep every night. An exhausted mind is rarely productive.
- Get up 30 minutes earlier so you don’t have to rush around like a mad man. That 30 minutes will help you avoid speeding tickets, tardiness, and other unnecessary headaches.
- Get off your high horse, talk it out, shake hands or hug, and move on.
- Don’t waste your time on jealously. The only person you’re competing against is yourself.
- Surround yourself with people who fill your gaps. Let them do the stuff they’re better at so you can do the stuff you’re better at.
- Organize your living space and working space. Read David Allen’s bookGetting Things Done
for some practical organizational guidance. - Get rid of stuff you don’t use.
- Ask someone if you aren’t sure.
- Spend a little time now learning a time-saving trick or shortcut that you can use over and over again in the future.
- Don’t try to please everyone. Just do what you know is right.
- Don’t drink alcohol or consume recreational drugs when you’re mad or sad. Take a jog instead. (more…)
for some practical organizational guidance.20 Nuggets from a Book : A Better Way to Make Money
1. The secret to losing money in the market is to know why. “The losers “were ‘playing the market’, not using it intelligently. The fellow at the other end of the deal, who was using it intelligently, not ‘playing the market’, is the one who got the money.”
2. “It is an undeniable fact that indiscriminate trading in a hectic market will send one to financial oblivion quicker than any other known process.”
3. “The most careful preparation-a systematic plan-is one of the essentials of success.”
4. “Market action is not complex but surprisingly simple. Yet it is often made to appear complex by newspaper forecasters and market letter writers.”
5. “Market action is human nature in action.”
6. All market movements are based on “two deep-seated and entirely natural emotions: the desire for gain and the fear of loss.”
7. “So anxious are people to find some talisman, some magic wand, that will help them secure the hidden riches of the market, that they will try anything from coin-flipping to crystal gazing to secure the desired assistance.”
8. “What marvelous results could be attained in the business of making money if those who buy stocks would take a little time to learn a few simple facts about the market in which they are blindly reposing their faith.”
9. “Market students are continually diverted from making true evaluations of securities and commodities because they study the statistics made by prices instead of the psychology of prices.”
10. “Adopt one system of trading and stick to it, just as you employ and stick to one physician in whom you learn to have confidence.” (more…)