Making money in the market is an unnatural act. We humans are predators and hunters evolved to track game on the horizon of an African savanna. Modern humans are maybe 5 million years old, but civilization has been around for only 10,000 years. Our brains have not had time to make the adjustment. In the market, this means that if a stock has gone up, you believe it will continue. This is why market tops and bottoms see volume spikes. To make money, you have to go against these innate instincts. Some people are born with this ability, while others can only learn it through decades of training.
Archives of “predators” tag
rssNewton’s Law of Trading Rules: Every lousy trading rule has an equal and opposite trading rule.
“Always seek out differing opinions and challenge your beliefs. Except when you know you’re right, then that other bullshit just becomes a distraction. Good luck with that.
It is very important to be flexible and open-minded. But invest with set rules and an iron discipline. Good luck with that.
Technical analysis and charts only tell you about what has already happened in the past. It’s much better to use the information from the future that we have when making decisions. Good luck with that.
Never run with the herd. It’s much better to be all alone on open ground, running in the wrong direction and wholly conspicuous to predators. Good luck with that.
Take your losses quickly. But don’t get scared out of a good position. Good luck with that.
Amateurs trade in the morning, pros trade in the afternoon, junkies trade overnight and lots of guys on TV just trade on paper. Good luck with that.
Be tactical and stay informed! But don’t try to time the market. Good luck with that.”
Good Luck-Advice for Traders
Always seek out differing opinions and challenge your beliefs. Except when you know you’re right, then that other bullshit just becomes a distraction. Good luck with that.
It is very important to be flexible and open-minded. But invest with set rules and an iron discipline. Good luck with that.
Technical analysis and charts only tell you about what has already happened in the past. It’s much better to use the information from the future that we have when making decisions. Good luck with that.
Never run with the herd. It’s much better to be all alone on open ground, running in the wrong direction and wholly conspicuous to predators. Good luck with that. (more…)
Run against the crowd, not with it
This is one of the hardest things to do. It goes against every fiber of your being. We are wired as humans to look to the crowd for our cues just like an animal runs with the herd. In the animal kingdom, Penguins will run to the edge of an iceberg and stop to see if one of them actually jumps in and swims to safety without being eaten by predators. When they feel it is safe, the rest of them will make the swim with confidence.In trading, you cannot wait for a trade to “feel safe” before you take a chance with your hard earned money. You have to anticipate, listen to your gut and be willing to buy when others have lost patience or composure hitting the sell button into your waiting hands. Likewise you have to become a seller when the rest of the crowd feels safe and starts buying, only to repeat the process over and over. Going against your natural instincts will keep you safe by having better entries and exits. The rest pays for itself