Try to find a long term trend and ride it up. Stay with the trend and don’t be tempted to grab a quick profit. Patience is one of the most important traits of a trend follower.- Be careful not to be shaken out by market fluctuations. Instead try to sit tight as long as there are no warnings showing up. Prices that come back so that your initial gain halves are not necessarily a reason to sell.
- Big wins can only be achieved with major trends. Find them and don’t hesitate to buy at high prices when you may think it is too late. A market is never too high to buy or too low to sell.
- Necessary is of course a stop loss near the entry point. A stop is the easiest way to put your capital at work on a trend, because otherwise you are too often and too long stuck in a trading market which goes nowhere or worse in a falling market.
- Absolutely forbidden is averaging down or fighting the market trend.
- To think that a market is cheaper now after prices came down and therefore must offer a better chance than it did when prices were higher, will put you in the wrong stocks at the wrong times.
- Never try to sell at the top. The trend may continue. Sell after a reaction if there is no rally.
- On the other hand don’t expect the market to end in a blaze of glory. Look out for warnings.
- Tape reading can tell you only that something is wrong. Don’t try to analyze the flow of transactions as the tape shows them in too much detail.
- Don’t look for breaks. Look out for warnings.
- Pyramid stocks only if the initial investment shows a gain.
- Look out for normal market behavior. If a market doesn’t act right, don’t touch it.
- If in a bear market a complete demoralization develops suddenly it may be a sign for a starting bull market.
- Observation of the market gives the best tips of all. Follow your experience to exploit them, while sticking to facts only.
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Try to find a long term trend and ride it up. Stay with the trend and don’t be tempted to grab a quick profit. Patience is one of the most important traits of a trend follower.21 Trading Quotes
| 1. “Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do.” ~ Mark Twain 2. “The market can stay irrational longer than you can stay solvent.” ~ John Maynard Keynes. 3. “I never buy at the bottom and I always sell too soon.” ~ Baron Rothschild 4. “When the facts change, I change my mind. What do you do, sir?” ~ John Maynard Keynes 5. “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.” ~ Warren Buffett 6. “It is not our duty as speculators to be on the bull side or the bear side but upon the winning side.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator 7. “The principles of successful speculation are based on the supposition that people will continue in the future to make the mistakes that they made in the past.” ~ Thomas F. Woodlock 8. “It never was my thinking that made the big money for me. It was always my sitting tight. Got that?” ~ Mr. Partridge in Edwin Lefevre’s Reminiscences of a Stock Operator 9. “They say you never grow poor taking profits. No, you don’t. But neither do you grow rich taking a four-point profit in a bull market.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator 10. “Remember that prices are never too high for you to begin buying or too low to begin selling. But after the initial transaction, don’t make a second unless the first shows you a profit.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator 11. “A loss never bothers me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does the damage to the pocketbook and the soul.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator 12. “If a man didn’t make mistakes, he’d own the world in a month. But if he didn’t profit by his mistakes, he wouldn’t own a blessed thing.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator 13. “The man who is right always has two forces working in his favor – basic conditions and the men who are wrong. In a bull market bear factors are ignored.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator 14. [What advice would you give the novice trader?] – “First, I would say that risk management is the most important thing to be well understood. Undertrade, undertrade, undertrade is my second piece of advice. Whatever you think your position ought to be, cut it at least in half.” ~ Bruce Kovner in Jack Schwager’s Market Wizards 15. “There is probably no class of trades with a higher failure rate than impulsive trades.” Jack Schwager in Market Wizards 16. [What is the most important advice you could give the novice trader?] – “Trade small because that’s when you are as bad as you are ever going to be. Learn from your mistakes.” ~ Richard Dennis in Jack Schwager’s Market Wizards 17. “The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses. If you can follow these three rules, you may have a chance.” ~ Ed Seykota in Jack Schwager’s Market Wizards 18. “Charting is a little like surfing. You don’t have to know a lot about the phsyics of tides, resonance, and fluid dynamics in order to catch a good wave. You just have to be able to sense when its’s happening and then have the drive to act at the right time.” ~ Ed Seykota in Jack Schwager’s Market Wizards 19. “I have two basic rules about winning in trading as well as in life: (1) If you don’t bet, you can’t win. (2) If you lose all your chips, you can’t bet.” ~ Larry Hite in Jack Schwager’s Market Wizards 20. “Perhaps the most important rule is to hold on to your winners and cut your losers. Both are equally important. If you don’t stay with your winners, you are not going to be able to pay for the losers.” ~ Michael Marcus in Jack Schwager’s Market Wizards 21. “Lose your opinion – not your money” ~ Unknown |
21 Quotes for Traders
1. “Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do.” ~ Mark Twain
2. “The market can stay irrational longer than you can stay solvent.” ~ John Maynard Keynes.
3. “I never buy at the bottom and I always sell too soon.” ~ Baron Rothschild
4. “When the facts change, I change my mind. What do you do, sir?” ~ John Maynard Keynes
5. “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.” ~ Warren Buffett
6. “It is not our duty as speculators to be on the bull side or the bear side but upon the winning side.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator
7. “The principles of successful speculation are based on the supposition that people will continue in the future to make the mistakes that they made in the past.” ~ Thomas F. Woodlock
8. “It never was my thinking that made the big money for me. It was always my sitting tight. Got that?” ~ Mr. Partridge in Edwin Lefevre’s Reminiscences of a Stock Operator
9. “They say you never grow poor taking profits. No, you don’t. But neither do you grow rich taking a four-point profit in a bull market.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator
10. “Remember that prices are never too high for you to begin buying or too low to begin selling. But after the initial transaction, don’t make a second unless the first shows you a profit.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator
11. “A loss never bothers me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does the damage to the pocketbook and the soul.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator (more…)
Trading Quotes
“Time is your friend; impulse is your enemy.” John (Jack) Bogle - “When reward is at its pinnacle, risk is near at hand.” John (Jack) Bogle
- “Rule no. 1 is never loose money. Rule no. 2 is never forget rule number one.” Warren Buffett
- “Look at market fluctuations as your friend rather than your enemy. Profit from folly rather than participate in it.” Warren Buffett
- “I paraphrase Lord Rothschild: The time to buy is when there is blood on the streets.” David Dreman
- “It is absurd to think that the general public can ever make money out of market forecasts.” Benjamin Graham
- “The whole secret to winning and losing in the stock market is to lose the least amount possible when you are not right.” William J. O Neil
- “It is not whether you are right or wrong that is important, but how much money you make when you are right and how much you lose when you are wrong.” George Soros
- “If you want to have a better performance than the crowd, you must do things differently from the crowd.” John Templeton
- “My first rule is not to lose money. Losing an opportunity is minor in comparison, because there are always new opportunities around the corner.” Burt Dohmen
- “Experienced traders control risk, inexperienced traders chase gains.” Alan Farley
- “Most traders take a good system and destroy it by trying to make it into a perfect system.”
- “Trade what you see, Not what you think”
- “A Technician is an Artist and Technical Analysis is the Super Skill of discovering sharp and compact Charts and Patterns depicting Trends and Targets with Precision and Perfection.”
- “Identifying the “Rhythmic Flow” of Financial Instruments for skimming the crème, quietly and consistently is the fascinating nature of the Technician’s profession.”
- “Like any craft, such as piano playing, perfection may be elusive – I’ll never play a piece perfectly, and I’ll never buy the low and sell the high – but consistency is achievable if you practice day in and day out.”
- “You never need to chase a trade. The market has plenty of opportunities. The money runs out before the opportunities do.”
- “Good trading is a peculiar balance between the conviction to follow your ideas and the flexibility to recognize when you have made a mistake.”
- “Always understand the risk/reward of the trade as it now stands, not as it existed when you put the position on.”
- “At all levels of play the secret of success lies not so much in playing well as in not playing badly.”
“Time is your friend; impulse is your enemy.” John (Jack) Bogle If-Then
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The idea of IF-THEN scenarios in trading is often misconstrued one. I often see it being interpreted in a sense of predicting stock’s action. A trader trying to apply it in this sense tries to think in terms ‘If a stock does this, it’s going to do that“. This approach is more acceptable if a trader thinks in terms of probability instead of certainty in which case the above sentence becomes “If a stock does this, it’s likely to do that“. Nothing’s wrong with that as long as a trader realizes that probability is just that – a probability that is going to work in a statistically valid number of samples but will not predict the outcome of each given case.
I, however, apply IF-THENs in a slightly different manner. For me it’s about defining my own action in response to market fluctuations. My IF-THEN is a scenario where IF is what market does and THEN is what I do in response. My intepretation thus becomes ‘If a stock does this, I do that”.
Certainly, it’s a derivation of the version above – you can arrive to it from “if a stock does this then it’s likely to do that, so I am going to react in such and such way”. My version is just more cut and dry.
What are the advantages of this aproach and why do we need to build a set of such scenarios? (more…)