Are trading losses often followed by further trading losses? Do you end up losing money in ‘revenge trading’ just to regain money lost? Do you finish trading prematurely when you’re up money, failing to exploit a good day?
Do you cut winning trades short because, deep inside, you don’t think you’ll be able to make large profits? Do you become stubborn in positions, turning small losers into large ones?
Is trading making you happy, proud, fulfilled, and content, or does it more often leave you feeling unhappy, guilty, frustrated, and dissatisfied? Are you having fun trading even when it’s hard work?
Are you making trades because the market is giving you opportunity, or are you placing trades to fulfill needs — for excitement, self-esteem, recognition, etc. — that are not being met in the rest of your life?
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Are trading losses often followed by further trading losses? Do you end up losing money in ‘revenge trading’ just to regain money lost? Do you finish trading prematurely when you’re up money, failing to exploit a good day?Trading Lessons From Nicolas Darvas
Nicolas Darvas has inspired traders for many generations. His book, “How I Made 2,000,000 in the Stock Market” is one that you’ll find on many recommended reading lists including my own. While some have argued that much of Darvas’ success had to do with lucky timing, his books are still widely read and for good reason.
A lot of traders can identify easily with Darvas because he went through the process of learning how to trade much like most people do today. Darvas began by first looking for the “secret” to the market. And, just like all of us have found, after finding no success from trading on the stock tips of others including brokers and expensive newsletters, Darvas figured out that he ultimately had to develop a trading system on his own. He accomplished that feat by committing himself to years of study of the market and from learning from his own mistakes. His determination, perseverance, and constant self-evaluation offers an excellent model for all traders to follow.
In continuing a series of posts where I share my notes I’ve taken (and refer to from time to time) after reading the books and methods of others, here are some things you may find of interest about Nicolas Darvas and his approach:
Trading Lessons From Nicolas Darvas:
- There are no good or bad stocks. There are only stocks that rise in price and stocks that decline in price, and that price is based on the laws of supply and demand in the marketplace
- “You can never go broke taking a profit” is bad advice that will result in overtrading and cutting winners short. Selling winners and holding losers is to be avoided at all times (more…)
Evaluating Yourself as a Trader
Here I’ve shortened and republished ten items for self-evaluation:
1) What is the quality of your self-talk while trading?
2) What work do you do on yourself and your trading while the market is closed?
3) How would your trading profit/loss profile change if you eliminated a few days where you lacked proper risk control?
4) Does the size of your positions reflect the opportunity you see in the market?
5) Are trading losses often followed by further trading losses due to frustration?
6) Do you cut winning trades short because, deep inside, you don’t think you’ll be able to achieve large profits?
7) Is trading making you happy, proud, fulfilled, and content, or does it more often leave you feeling unhappy, guilty, frustrated, and dissatisfied?
8) Are you making trades because the market is giving you opportunity, or are you placing trades to fulfill needs–for excitement, self-esteem, recognition–that aren’t being met in the rest of your life?
9) Are you seeking returns that are realistic given your level of experience and development?
10) Can you identify the specific edges you possess over the many other motivated, interested traders that fail to achieve success in the markets?
Many answers to trading problems begin by asking the right questions.