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"The Confident Trader "

  
  Education
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Confidence overcomes fear. Confidence also overcomes greed because a component of greed is an underlying sense of scarcity. To be confident doesn’t mean that every trade or trading day will be profitable. What it does mean is that when you look to where you want to go, you know that you can figure out a strategy that will get you there. And you know you can execute that strategy in a consistent manner. A successful strategy doesn’t mean anything if you don’t or can’t or won’t employ it.

Theoretically we should be as successful at trading and investing as our trading and investing strategies. Unfortunately the vast majority of traders and investors fall far short of the results of their strategies. They trip over themselves again and again on the way to employing their methods. My work as a trading coach is to enable traders around the world to become as good as their methods.

Confidence need not waver when you have dips and troughs and plateaus in your trading. Confidence is developed when you realize you can correct mistakes and learn from failures. You don’t persist in failing. You learn and move on. You don’t fear repeating the failure either, you simply anticipate correcting it.

Self esteem is basically the sum total of all the thoughts we have about ourselves. This is quite important because we do tend to become what we think about ourselves. The noted philosopher and psychologist, William James, said, “People, in general, become what they think of themselves.” Not only did he say this but he added that this was the essence of all we had learned in psychology in the prior 100 years.

What do you think of yourself as a trader? Do you believe that your dream of excelling as a trader is possible? Do you have a set of philosophies that support your dream? Are you as good as your methods? If not, it’s time to do something about it.

Consider my coaching program. I speak for an hour on the phone each week with the traders I coach. We review your trading, beliefs, attitudes, habits, and philosophies. I help you do more of what works and stop doing what doesn’t work. Through exercises, assignments, and repetitive listening to the CD’s I send, you can become as good as your methods. The money you invest in yourself—especially in difficult times—is truly the best investment you can make. It will pay you exponentially because you never leave yourself. Call me at 800-692-0080, and we’ll discuss it.

Survival of the fittest

  
  Education
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When he hear the term ‘survival of the fittest’ bandied about, people are usually referring to contests of absolute strength and think of the Darwinian struggle for life. Trading is often thought of in a similar light.

It’s interesting to note that while Darwin came up the idea of natural selection, the term ‘survival of the fittest’ was coined by economist philosopher Herbert Spencer. What is more, both Darwin and Spencer were not referring to competitions of brute strength, but of best fit. That is, the survivors were those who best fit in to the environment around them. Brute strength is an aspect of this, but it is only half the story. Adaptation to the environment is also required.
Chance and randomness plays a big role in natural selection, as it does with trading success, but we can be sure that regardless of how strong we are with respect to risk management, discipline etc, if we don’t have an edge then we will likely die out. Likewise, an edge and no strength could prove equally fatal. Because the environment of the active investor is dynamic and forever changing, it may be useful to think of the circles below as constantly moving around about other, only rarely intersecting.

Five surprising lessons from a career on Stock Market

  
  Education
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1) Deep thought: Surprisingly few people rolled up their sleeves and thought deeply about why things in market are the way the are. What causes markets to go up and down? Why do things blow up? Why do most investors under-perform markets? Lots of myths and urban legends, not nearly as much quantitative evidence.

If you get really deep about it and study the data, there are some rules to learn. To succeed in markets, one needs to become a philosopher-mathematician.

2) Long-Term Greedy: Too many people went for the easy money, but that was never what motivated me. It was more about intellectual curiosity and honing ones craft, and less about the quick hit. I made less money compared to many of my peers, but I kept more of it and never blew up.

The phrase “long-term greedy” was coined by former Goldman Sachs director Gus Levy many years ago. You can make (lots of) money over time, but only by serving clients’ interests. Its amazing to me that view is so far out of fashion today.

3) Hard Work: There is no other field where a person of average skills and intelligence who is willing to put their head down and work hard can makes 100s of thousands or even millions of dollars a year — but only if they are diligent and patient and willing to put in the hours. (more…)

Truth and Trading

  
  Education
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Recently I’ve been listening to The Teaching Company CD’s while I work out. I was particularly intrigued by a discussion of Meditations by Marcus Aurelius, a Roman Emperor who had always wanted instead to be a philosopher. His philosophy could be summarized in this way: Get out of bed, do your duty, and appreciate things along the way. Not bad.

He believed in certain absolute values for living, and chose the values of Socrates which are truth, justice, courage, moderation, and wisdom.

Asking myself how these values impact trading I came up with some new insights. But first let’s look at how Marcus Aurelius defined these values. Professor J Rufus Fears, who teaches the course on “Books That Have Made History: Books That Can Change Your Life” explained it the following way:

1. Truth: Truth is an absolute value. Some things are true in all places and times. Resisting evil, for example, is always right.

2. Justice: Justice consists of treating others as one would wish to be treated. “Do unto others as you would have them do unto you” summarizes this concept of justice.

3. Courage: Courage means standing up for justice.

4. Moderation: Nothing should be carried to excess.

5. Wisdom: Wisdom enables a person to know what justice is, to recognize when courage is required, and to do what is right.

So how do these values play out in our trading? In this column, let’s explore truth as it applies to your trading. (more…)

The Confident Trader

  
  Education
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Confidence overcomes fear. Confidence also overcomes greed because a component of greed is an underlying sense of scarcity. To be confident doesn’t mean that every trade or trading day will be profitable. What it does mean is that when you look to where you want to go, you know that you can figure out a strategy that will get you there. And you know you can execute that strategy in a consistent manner. A successful strategy doesn’t mean anything if you don’t or can’t or won’t employ it.

Theoretically we should be as successful at trading and investing as our trading and investing strategies. Unfortunately the vast majority of traders and investors fall far short of the results of their strategies. They trip over themselves again and again on the way to employing their methods. My work as a trading coach is to enable traders around the world to become as good as their methods.

Confidence need not waver when you have dips and troughs and plateaus in your trading. Confidence is developed when you realize you can correct mistakes and learn from failures. You don’t persist in failing. You learn and move on. You don’t fear repeating the failure either, you simply anticipate correcting it.

Self esteem is basically the sum total of all the thoughts we have about ourselves. This is quite important because we do tend to become what we think about ourselves. The noted philosopher and psychologist, William James, said, “People, in general, become what they think of themselves.” Not only did he say this but he added that this was the essence of all we had learned in psychology in the prior 100 years. (more…)

A Blast From the Past-Quotes Relates to Trading

  
  Education
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The quotes alone are worth the price of admission. Here are a few that could be applied to trading. Take a read and think about how each quote relates to trading.

Emerson said, “All is riddle, and the key to a riddle is another riddle.”

Faulkner once said, “Don’t bother just to be better than your contemporaries or predecessors. Try to be better than yourself.”
Einstein once said, “Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”
Samuel Johnson wrote, “Almost all absurdity of conduct arises from the imitation of those who we cannot resemble.”
Shakespeare wrote, “Nothing is so common as the wish to be remarkable.” “When you have eliminated the impossible, whatever remains, however improbable, must be the truth.”
Robert Oxton Bolton once wrote, “A belief is not merely an idea the mind possesses; it is an idea that possesses the mind.”
Nietzsche wrote, “The individual has always had to struggle to keep from being overwhelmed by the tribe.”
Albert Einstein said, “Whoever undertakes to set himself up as judge in the field of truth and knowledge is shipwrecked by the laughter of the gods.”
“The defects and faults of the mind are like wounds in the body; after all imaginable care has been taken to heal them up, still the will be a scar left behind.” French writer François de la Rochefoucauld. “
“It has been said, ‘time heals all wounds.’ I do not agree. The wounds remain. In time, the mind, protecting its sanity, covers them with scar tissue and the pain lessens. But it is never gone.” Rose Kennedy 
Philosopher Kahlil Gibran wrote “Out of suffering have emerged the strongest souls; the most massive characters are seared with scars.”

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