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Eleven Rules

Rule #1
Be data centric in your approach.
Take the time and make the effort to understand what works and what doesn’t. Trading decisions should be objective and based upon the data.

Rule #2
Be disciplined.
The data should guide you in your decisions. This is the only way to navigate a potentially hostile and fearful environment.

Rule #3
Be flexible.
At first glance this would seem to contradict Rule #2; however, I recognize that markets change and that trading strategies cannot account for every conceivable factor. Giving yourself some wiggle room or discretion is ok, but I would not stray too far from the data or your strategies.

Rule #4
Always question the prevailing dogma.
The markets love dogma. “Prices are above the 50 day moving average”, “prices are breaking out”, and “don’t fight the Fed” are some of the most often heard sayings. But what do they really mean for prices? Make your own observations and define your own rules. See Rule #1.

Rule #5
Understand your market edge.
My edge is my ability to use my computer to define the price action. I level the playing field by trading markets and not companies.

Rule #6
Money management.
Money management. Money management. It is so important that it is worth saying three times. There are so few factors you can control in the markets, but this is one of them. Learn to exploit it.

Rule #7
Time frame.
Know the time frame you are operating on. Don’t let a trade turn into an investment and don’t trade yourself out of an investment.

Rule #8
Confidence and conviction.
Believe in your strategies and bet wisely but with conviction. There is nothing more frustrating than having a good strategy work as you expect, yet at the end of the day, you have very little winnings to show for your efforts.

Rule #9
Persistence.
It takes persistence to operate in the markets. Success doesn’t come easy, and if it does, then I would be careful. Even the best strategies come with losses, and they always seem to come when you get the nerve to make the big bet. Stay with your plan. If you have done your home work, the winning trades will follow.

Rule #10
Passion.
In the end, trading has to be about your bottom line, but you have to love what you do and no amount of money is worth it if you aren’t passionate about the process. No matter how much success you enjoy, in the markets you can never stop learning.

Rule #11
Take care of yourself.
No amount of money is worth it if your health is failing or you have managed to alienate yourself from family and friends in the process.

Ten Characteristics of Successful Traders

1) The amount of time spent on their trading outside of trading hours (preparation, reading, etc.);10-ASR
2) Dedicated periods to reviewing trading performance and making adjustments to shifting market conditions;
3) The ability to stop trading when not trading well to institute reviews and when conviction is lacking;
4) The ability to become more aggressive and risk taking when trading well and with conviction;
5) A keen awareness of risk management in the sizing of positions and in daily, weekly, and monthly loss limits, as well as loss limits per position;
6) Ongoing ability to learn new skills, markets, and strategies;
7) Distinctive ways of viewing and following markets that leverage their skills;
8) Persistence and emotional resilience: the ability to keep going in the face of setback;
9) Competitiveness: a relentless drive for self-improvement;
10) Balance: sources of well-being outside of trading that help sustain energy and focus.

Ten Characteristics I See Among Successful Traders

Ten CharacteristicsThere’s no one formula for trading success, but there are a few common denominators that I’ve tracked in my years of working with traders:

1) The amount of time spent on their trading outside of trading hours (preparation, reading, etc.);

2) Dedicated periods to reviewing trading performance and making adjustments to shifting market conditions;

3) The ability to stop trading when not trading well to institute reviews and when conviction is lacking;

4) The ability to become more aggressive and risk taking when trading well and with conviction;

5) A keen awareness of risk management in the sizing of positions and in daily, weekly, and monthly loss limits, as well as loss limits per position; (more…)

If you want to be a successful trader or investor

One You need to be able to persist and keep committed to your goal of being successful for the long haul.  If there is nothing that is going to stop you from being a trader you will get there.

Two You do need to know when to quit but not as relates to the above point.  You need to know when to quit a trade, a theory, a strategy and you need the wisdom from your persistence at this business to know how and when to do this.

Three You’ve always got to be flexible.  You have to duck and dive with the best of them.  You’ve got to be able to change direction on a dime or you’re dead meat in this game.

Street Smarts

Street Smarts is a new book out by the South Alabama bowtie man. There is an interesting video discussion here on being humbled by the market.STREET SMARTS

1. “Jim Rogers on When He Lost Everything

2. A bit about his new book follows: Street Smarts by Jim Rogers

and an excerpt:

‘Today, I wish I knew how to instill this characteristic in my children. I wish I could call my father or mother and say, “What pill did you give us?” Call it discipline, call it diligence, call it work ethic—­we all have it, my brothers and I. I do not know where it comes from. I wish I could find the gene. I am certainly not alone in recognizing the value of persistence—we all know smart people who are not successful; we all know talented people who are not successful. Persistence is what makes the difference.’

11 Trading Rules

Rule #1
Be data centric in your approach.
Take the time and make the effort to understand what works and what doesn’t. Trading decisions should be objective and based upon the data.

Rule #2
Be disciplined.
The data should guide you in your decisions. This is the only way to navigate a potentially hostile and fearful environment.

Rule #3
Be flexible.
At first glance this would seem to contradict Rule #2; however, I recognize that markets change and that trading strategies cannot account for every conceivable factor. Giving yourself some wiggle room or discretion is ok, but I would not stray too far from the data or your strategies.

Rule #4
Always question the prevailing dogma.
The markets love dogma. “Prices are above the 50 day moving average”, “prices are breaking out”, and “don’t fight the Fed” are some of the most often heard sayings. But what do they really mean for prices? Make your own observations and define your own rules. See Rule #1.

Rule #5
Understand your market edge.
My edge is my ability to use my computer to define the price action. I level the playing field by trading markets and not companies.

Rule #6
Money management.
Money management. Money management. It is so important that it is worth saying three times. There are so few factors you can control in the markets, but this is one of them. Learn to exploit it.

Rule #7
Time frame.
Know the time frame you are operating on. Don’t let a trade turn into an investment and don’t trade yourself out of an investment.

Rule #8
Confidence and conviction.
Believe in your strategies and bet wisely but with conviction. There is nothing more frustrating than having a good strategy work as you expect, yet at the end of the day, you have very little winnings to show for your efforts.

Rule #9
Persistence.
It takes persistence to operate in the markets. Success doesn’t come easy, and if it does, then I would be careful. Even the best strategies come with losses, and they always seem to come when you get the nerve to make the big bet. Stay with your plan. If you have done your home work, the winning trades will follow.

Rule #10
Passion.
In the end, trading has to be about your bottom line, but you have to love what you do and no amount of money is worth it if you aren’t passionate about the process. No matter how much success you enjoy, in the markets you can never stop learning.

Rule #11
Take care of yourself.
No amount of money is worth it if your health is failing or you have managed to alienate yourself from family and friends in the process.

Patience, persistence and presence of mind are what you need

Sitting at a desk a stone’s throw from the former Lehman Brothers building in London’s Docklands, it felt pretty good to make $1,898.50 by moving my finger twice. As somebody who works for a monthly pay cheque, it was the fastest two grand I’d made in my life.

But a day’s training as a City trader taught me more than the simple lesson that money moves fast in the Square Mile. It’s also about persistence, patience, presence of mind – and making a shrewd bet.

At a beginners’ trading session at futures specialist Amplify Trading, participants could deal in currencies, oil or the widely followed S&P 500 index of US shares. I chose foreign exchange. Aware of the upheaval on the bonds market as the weak economies of Ireland and Portugal came under pressure from speculators, I chose to “go short” on the euro – a bet that the European currency would fall against the US dollar. But after trading two “lots” – a specific volume – my trade immediately went bad. Disaster.

My “professor”, managing director William de Lucy, urged against instantaneously hedging by betting in the opposite direction. He smiled and explained that trading was as much about staying the course as making the right choices. Buying and selling randomly or reacting to headlines was a recipe for failure, he said.

A few minutes later, the euro started to fall. I was exultant, without thinking for a second about family and friends in my native Spain becoming poorer, in dollar terms, as I was getting richer. Tempted to take some early profits, I thought of hedge fund manager John Paulson, who made $6bn by betting on the collapse of the US sub-prime mortgage market – and then waiting two years to close the trade. Patience.

At the risk of stereotyping, the firm says testosterone-fuelled men tend to be more active – even if there is little activity in the market – while women are more patient, consistent and selective. De Lucy says his firm tries to stop traders thinking they will make instant fortunes, reiterating that the job is a marathon, not a sprint.

“This is like a tennis match: you can’t smash the ball all the time, as you will miss the hit when the right time comes,” he said. Trading rooms as a bear pit of loud Cockney barrow-boys? That was the 1990s. They are quieter and more diverse now, he says.

So, as a trader who ticks two boxes for diversity (female and foreigner), I decided to be patient, watching my trade become more and more profitable. To distract myself, I joined the chatroom on the right of my screen, connecting former Amplify students around the world, now working at different banks and trading rooms. Since some were in Spain, I asked them what would be tougher: to bet on the financial markets or on Real Madrid winning the league?

My fun was only interrupted by the complaints of my heavy-trading, money-losing colleagues, one of whom carried out a hyperactive run of 87 trades in euros, oil and stocks to net a profit of just $6.25. After a much-needed cup of tea, my professor suggested I take some profits. I agreed, as I had already made quite a lot and, frankly, things were getting boring. Where was the craft in this job?

I took $750, thinking about one of De Lucy’s remarks: “Psychology is more than half of this game.” I looked at the towers of Canary Wharf, once full of bankers and traders who thought their systems could never go wrong.

Becoming my own chief risk officer, I called it a day half an hour before the closing bell. I had made far more than anybody else in my group, gone twice for tea, had a chat about football – it was time to cash in my chips and go.

A swift reality check ensued – it was all, of course, a paper profit. Leaving Canary Wharf, I felt the way thousands of traders must feel: that it’s all a game. With two clicks, I had made more than billions of people around the globe live on for a year. But in a sense, it’s not all paper: profits on the financial markets mean a loss to others, people I don’t know. I looked at the financial pros leaving work in a rush and wondered whether they were aware of the people and circumstances beyond their screens. Have we still not learned to consider the human factor?

Persistence -Self Discipline

Nothing in the world can take the place of Persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan “Press On” has solved and always will solve the problems of the human race.
– Calvin Coolidge

Persistence is the fifth and final pillar of self-discipline.

What Is Persistence?

Persistence is the ability to maintain action regardless of your feelings. You press on even when you feel like quitting.

When you work on any big goal, your motivation will wax and wane like waves hitting the shore. Sometimes you’ll feel motivated; sometimes you won’t. But it’s not your motivation that will produce results — it’s your action. Persistence allows you to keep taking action even when you don’t feel motivated to do so, and therefore you keep accumulating results.

Persistence will ultimately provide its own motivation. If you simply keep taking action, you’ll eventually get results, and results can be very motivating.  (more…)

25 Unwritten Rules of Management

1. Learn to say, “I don’t know.” If used when appropriate, it will be often.
2. It is easier to get into something than it is to get out of it.
3. If you are not criticized, you may not be doing much.
4. Look for what is missing. Many know how to improve what’s there, but few can see what isn’t there.
5. Viewgraph rule: When something appears on a viewgraph (an overhead transparency), assume the world knows about it, and deal with it accordingly.
6. Work for a boss with whom you are comfortable telling it like it is. Remember that you can’t pick your relatives, but you can pick your boss.
7. Constantly review developments to make sure that the actual benefits are what they are supposed to be. Avoid Newton’s Law.
8. However menial and trivial your early assignments may appear, give them your best efforts.
9. Persistence or tenacity is the disposition to persevere in spite of difficulties, discouragement, or indifference. Don’t be known as a good starter but a poor finisher.
10. In completing a project, don’t wait for others; go after them, and make sure it gets done.
11. Confirm your instructions and the commitments of others in writing. Don’t assume it will get done!
12. Don’t be timid; speak up. Express yourself, and promote your ideas.
13. Practice shows that those who speak the most knowingly and confidently often end up with the assignment to get it done.
14. Strive for brevity and clarity in oral and written reports. (more…)

6 Effective Ways to Trading Success

1.  Identify if you really want to be a trader. Is this truly your desire?

Before you can develop persistence and eventually achieve success in the tough trading game, you need to first identify if this is truly what you want to do. If you are only doing this for the money then the odds of you making it through the learning process is very slim. You have to be ‘foolish’ enough through your initial losses to believe that you can rise to the top 10% of profitable traders. Most traders learning curves are measured in years not weeks so trading is more like getting a degree than reading a book over the weekend.

2. Determine your motivation. Why do you want to be a trader?

Motivation comes from a deep reason why we want to achieve or have something.  If you know why you’re doing what you’re doing, it gives you more energy to keep moving forward in learning and getting experience. If you are trading to make a quick buck, then you do not make that buck quickly you will join the quitters. If you are trading to have enough money to pay off your house in 5 years that will create the energy to drive you forward against the odds.

You can get through this first learning stage by writing down specifically all the things you want to have or accomplish through your trading.  List all your desires and wants, all the rewards that will come through you not quitting the trading game. This is what will get you through if your heart is in it. You need a very big bucket of carrots waiting for you on the other side of trading success to get through the whips the market will hit you with while you are learning.

3. Outline Your Definite Action Step

Identifying your wants or desires speaks of what you want to achieve.  Determining your motivation shows the reasons why you want to achieve what you want.  Outlining your definite action step is necessary to know howyou will be able to achieve what you want.

When you know how to get what you want, it makes it easier to achieve it.  To know how, it pays to do some research and planning of what needs to be done on your part.  Be specific on each step you need to take.  Identify at least two ways and plans on how you can achieve your goals.

4. Keep the right mindset, believe that you are going to be a winning trader. (more…)