Archives of “patience” tag

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The Mind of the Greatest Trader-Livermore

  
  Education
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As revolutionary as this early-day stock guru’s approach to trading was for his time, in truth, Jesse’s stock trading “secrets” just came down to good, sound basics. His success stands as a testament to the fact that the further we wander away from trading breakout stocks and a simple, disciplined approach to trading stocks, the less success we’re inclined to have. Just how unconventional was Jesse Livermore? Take a look:

  • He believed in trading top quality stocks, not “weaker sister” stocks.
  • A stock hitting new highs was a signal of a stock’s strength to Livermore, and meant the stock had broken through its overhead supply of sellers. Today, we call this a “breakout stock”.
  • He was one of the first stock traders to realize that stocks tend to move in industry groups not in isolation.
  • Unlike today’s self-appointed stock pick gurus, Jesse Livermore was a humble student of the market, and never considered himself a master.

Livermore was ever conscious of the part one’s psychology played in achieving stock trading success, so he never spoke about what he was doing to anybody, and actually was known to ask people to keep their stock tips to themselves! He was so protective of his trading psychology that he would not even use the words “bullish” or “bearish,” thinking they would create an emotional mindset that he wanted to avoid. (more…)

Decisiveness

  
  Education
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“It’s better to be boldly decisive and risk being wrong than to agonize at length and be right too late” – Anonymous

“Procrastination in the name of reducing risk actually increases risk” – Colin Powell

“Take time to deliberate, but when the time for action has arrived, stop thinking and go in” – Napoleon Bonaparte

“In any moment of decision, the best thing you can do is the right thing, the next best thing you can do is the wrong thing, and the worst thing you can do is nothing” – Theodore Roosevelt

If you have the patience to wait for your setup then you better have the decisiveness to GET IN THE TRADE once price comes to you and your entry parameters are present. How many people wait for the trade to come and then when it arrives start analyzing if they should take it? When the trade has arrived it is time for action, not analyzation. This is what preparation is for. If you have done your homework there is no need for hesitation – you already know what to do. At the same time trading is not static. There are times when the odds are high that the market will reverse before your final target is hit. Do you have the decisiveness to reverse the position or flatten when this situation is present? It has been said that the number one ingredient to being a great trader is the trading guts to pull the trigger as soon as a reverse is anticipated. Be decisive.

Self-Awareness

  
  Education
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“You can’t kid yourself in trading. You have to deal with who you really are, and take responsibility for all your shortcomings, which the markets have a way of revealing rather starkly. You have to confront all your fears and tame them. You have to check your ego at the door.

 You learn from each experience. There’s nothing in life that you can do that can guarantee that you’re not going to go through some pain. Trading is certainly not a singular pursuit in that regard. What I have learned is this: Patience and diligence are rewarded. Profits will eventually accrue if you do the right thing and stick with it. That’s the most important thing!

 

Hallmark of a Position Day Trader

  
  Education
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hallmark-trader

  • Routine and Predictable daily methodology
  • Psychological Control: Discipline, Focus, Patience
  • Macro vs Micro Market Analysis … seeing the Big Picture
  • Comprehensive intraday Hit List analysis
  • Multiple intraday Set-up opportunities
  • Various chart pattern recognition … low risk opportunities
  • Capital preservation = risking less than 50% maximum stop loss.
  • Expectation & Time Exits: Scalp, Breakeven, Profit Target, Let Profits Run
  • Trading Execution Commitment: honoring Set-up signals, not P&L

    • 27 Motivational Quotes for Traders

      
      Education
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    1. IF A TRADER DOES NOT UNDERSTAND WHAT HAPPENS TO HIM PSYCHOLOGICALLY WHILE IN A TRADE, HE IS DOOMED TO LOSE UNTIL HE DOES OR HE RUNS OUT OF MONEY.
    2. THE MARKET PAYS YOU TO BE DISCIPLINED.
    3. BE DISCIPLINED EVERY DAY, EVERY TRADE AND THE MARKET WILL REWARD YOU.
    4. ALWAYS LOWER YOUR TRADE SIZE WHEN YOURE TRADING POORLY.
    5. NEVER TURN A WINNER INTO A LOSER.
    6. YOU’RE BIGGEST LOSER CANNOT EXCEED YOUR BIGGEST WINNER.
    7. DEVELOP A METHODOLOGY AND STICK WITH IT.
    8. BE YOURSELF. DON’T TRY TO BE SOMEONE ELSE.
    9. YOU ALWAYS WANT TO BE ABLE TO COME BACK AND PLAY THE NEXT DAY.
    10. EARN THE RIGHT TO TRADE BIGGER.
    11. GET OUT OF YOUR LOSERS.
    12. THE FIRST LOSS IS THE BEST LOSS.
    13. DON’T HOPE AND PRAY.
    14. DON’T SPECULATE.
    15. NEVER TAKE A BIG LOSS.
    16. HIT SINGLES NOT HOME RUNS.
    17. CONSISTENCY BUILDS CONFIDENCE.
    18. LEARN TO SWEAT OUT YOUR WINNERS.
    19. MAKE THE SAME TYPES OF TRADES OVER AND OVER AGAIN.
    20. BE A BRICKLAYER.
    21. DON’T OVER ANALYZE.
    22. ALL TRADERS ARE EQUAL IN THE EYES OF THE MARKET.
    23. IT’S THE MARKET ITSELF.
    24. ITS BORING. ITS A JOB. PATIENCE.
    25. 70% OF THE MONEY FLOWING COMES FROM INSTITUTIONAL INVESTORS.
    26. STRONG VOLUME IS 150% OF NORMAL VOLUME.
    27. TRADE WHAT YOU SEE, NOT WHAT YOU THINK.

    Jesse Livermore / "How to trade stocks"

      
      Education
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    –“All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical (technical) formations and patterns recur on a constant basis.”

    –“The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.”

    –Don’t take action with a trade until the market, itself, confirms your opinion. Being a little late in a trade is insurance that your opinion is correct. In other words, don’t be an impatient trader.

    –“It is foolhardy to make a second trade, if your first trade shows you a loss. Never average losses. Let this thought be written indelibly upon your mind.”

    –“Remember this: When you are doing nothing, those speculators who feel they must trade day in and day out, are laying the foundation for your next venture. You will reap benefits from their mistakes.”

    –“When a margin call reaches you, close your account. Never meet a margin call. You are on the wrong side of a market. Why send good money after bad? Keep that good money for another day.”

    –“Successful traders always follow the line of least resistance. Follow the trend. The trend is your friend.”

    –A prudent speculator never argues with the tape. Markets are never wrong–opinions often are.

    –Few people succeed in the market because they have no patience. They have a strong desire to get rich quickly.

    –“I absolutely believe that price movement patterns are being repeated. They are recurring patterns that appear over and over, with slight variations. This is because markets are driven by humans–and human nature never changes.”

    –When you make a trade, “you should have a clear target where to sell if the market moves against you. And you must obey your rules! Never sustain a loss of more than 10% of your capital. Losses are twice as expensive to make up. I always established a stop before making a trade.”

    –“I am fully aware that of the millions of people who speculate in the markets, few people spend full time involved in the art of speculation. Yet, as far as I’m concerned it is a full-time job–perhaps even more than a job. Perhaps it is a vocation, where many are called but few are singled out for success.”

    –“The big money is made by the sittin’ and the waitin’–not the thinking. Wait until all the factors are in your favor before making the trade.”

    Patience is a virtue

      
      Education
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    As a professional trader I still get all the urges to system chase and break the rules as much as anyone, but the key is learning how to control those urges.

    This week has seen some fantastic set ups in the market, and I have known which way the price would likely move thanks to the powerful tools I have at my disposal, but the problem has been that the price just hasn’t been retracing to the levels that I have been waiting at.

    This can cause some people to want to just jump in because they have been right about the overall direction the last 10 times, or even worse some people may even be tempted to enter the market without using a stop loss thinking that the price will come their way in the end.

    These urges and acting upon them show a lack of patience and discipline and this is what the market punishes the most. (more…)

    Hallmark of a Position Day Trader

      
      Education
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  • Routine and Predictable daily methodology
  • Psychological Control: Discipline, Focus, Patience
  • Macro vs Micro Market Analysis … seeing the Big Picture
  • Comprehensive intraday Hit List analysis
  • Multiple intraday Set-up opportunities
  • Various chart pattern recognition … low risk opportunities
  • Capital preservation = risking less than 50% maximum stop loss.
  • Expectation & Time Exits: Scalp, Breakeven, Profit Target, Let Profits Run
  • Trading Execution Commitment: honoring Set-up signals, not P&L

    • 7 Crucial Points for Traders

      
      Education
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    1. You don’t choose the stock market; it chooses you.  A little bit of early trading success can have a profound effect on a person’s soul.  If it does choose you, you’ll have to accept that your life and investing will become forever connected.
    2. Your methodology must provide an unshakeable foundation that you believe in totally, and you must have the conviction to trade based upon it.   If your belief is tentative or if you don’t have complete faith in your methodology, then a few bad trades will destabilize and erode your confidence. 
    3. A calm mindset that can focus on the execution and not on the outcome is what produces profits.  It takes total emotional control.  You must maintain your balance, rhythm and patience.  You need all three to stay in the game.
    4. The markets are always conniving with ingenious techniques to get you to lose your patience, to get you frustrated or mad, to bait you to do the wrong thing when you know you shouldn’t.  A champion doesn’t allow the markets to get under his skin and take him out of his game.
    5. Like a great painting, all good trades start with a blank canvas.  Winning traders first paint the trade in their mind’s eye so that their emotional selves can reproduce it accurately with clarity and consistency, void of emotions as they play it out in the markets. (more…)

    Keep a Cash Reserve & Be Patient

      
      Education
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    There are times when playing the stock mar­ket that your money should be inactive – waiting on the sidelines in cash – waiting to come into play.

    In the stockmarket – time is not money – time is time ­and money is money.
    Often money that is just sitting can later be moved into the right situation at the right time and make a vast fortune – patience – patience.

    Patience is the key to success not speed.
    Time is a cunning speculator’s best friend if he uses it right.

    Remember the clever speculator is always patient and has a reserve of cash.

    Jesse Livermore

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