1. Buying a weak stock is like betting on a slow horse. It is retarded. |
Archives of “simplicity” tag
rssGood Traders & Bad Traders
Good Traders
- The good traders that I have met are generous with their time and knowledge.
- Good traders are flexible in their trades and opinions they follow where the market takes them.
- The majority of good traders have simple charts that focus on price action. They focus on the simplicity of what works.
- A good trader will admit a loss and share what happened.
- Good traders are first and foremost traders, any service or product they offer is secondary.
- Good traders are humble and respect the market and the reality of trading.
- Good traders at times will call real trades and post entries and exits.
- Good traders are on social media not for show but for teaching and friendships and having fun.
- Good traders go with the current market trend.
- Those who make a comfortable living trading are playful, joking and happy .
Bad Traders
- Many bad traders try to tear down others to make themselves feel superior. Good traders have no need to do this they have highly self esteems already. (more…)
Thirty Trading Rules for Traders
1. Buying a weak stock is like betting on a slow horse. It is retarded.
2. Stocks are only cheap if they are going higher after you buy them.
3. Never trust a person more than the market. People lie, the market does not.
4. Controlling losers is a must; let your winners run out of control.
5. Simplicity in trading demonstrates wisdom. Complexity is the sign of inexperience.
6. Have loyalty to your family, your dog, your team. Have no loyalty to your stocks.
7. Emotional traders want to give the disciplined their money.
8. Trends have counter trends to shake the weak hands out of the market.
9. The market is usually efficient and can not be beat. Exploit inefficiencies.
10. To beat the market, you must have an edge.
11. Being wrong is a necessary part of trading profitably. Admit when you are wrong.
12. If you do what everyone is doing you will be average, so goes the definition.
13. Information is only valuable if no one knows about it.
14. Lower your risk till you sleep like a baby.
15. There is always a reason why stocks go up or down, we usually only learn the reason when it is too late.
16. Trades that make a lot of intellectual sense are likely to be losers.
17. You do not have to be right more than you are wrong to make money in the market.
18. Don’t worry about the trades that you miss, there will always be another.
19. Fear is more powerful than greed and so down trends are sharper than up trends.
20. Analyze the people, not the stock.
21. Trading is a dictators game; you can not trade by committee.
22. The best traders are the ones who do not care about the money.
23. Do not think you are smarter than the market, you are not.
24. For most traders, profits are short term loans from the market.
25. The stock market can not be predicted, we can only play the probabilities.
26. The farther price is from a linear trend, the more likely it is to correct.
27. Learn from your losses, you paid for them.
28. The market is cruel, it gives the test first and the lesson afterward.
29. Trading is simple but it is not easy.
30. The easiest time to make money is when there is a trend.
Become an expert at one market behaviour
Simplicity and focus is the mother of success. “You need to start as small as possible and then gradually allow yourself to grow into greater and greater amounts of market information. What you want to do is become an expert at just one particular type of behavior pattern that repeats itself with some degree of frequency. To become an expert, choose one simple traing system that identifies a pattern. Your objective is to understand completely every aspect of the system. In the meantime, it is important to avoid all other possibilities and information”
The Power of Elimination
One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity.” – Bruce lee
So what do Bruce Lee and Leonardo Da Vinci have in common? They both understood, as any good trader should, the essentials of making an impact…the power of subtracting noise.
As a trader you should do the same:
1) Subtract your emotional baggage
In close to twenty years of trading, I have yet to meet ONE successful trader that is emotionally unbalanced. Bring your emotional baggage, your demons, your insecurities to your trading terminal, and you likely to make wrong decisions.
2) Subtract financial entertainment
Blue Channels and other financial media are a great source of info-tainment and you can surely learn a lot. But if you sit in front of the TV all day without having a solid plan thinking that’s what professional traders suppose to do, you virtually guarantee to trade yourself out of capital very shortly. Understand that the delivery of TV news is designed to hit the emotional part of your brain. You might benefit from shutting it off in the short run.
3) Subtract noise
Good trading is not about having 8 screens, 1500 indicators, live steaming news, Twitter feeds, and a phone line with direct connection to god. Clean up your charts to the essence, price, volume and maybe one or two indicators. Clean up your screens and eliminate as much noise as possible, go over your trading diary and identify which inputs produced the most output, then go back and close the applications that add nothing but flicking lights and funny sounds, subtract until you are left with the essence of your system. (more…)
Quotes from -Walter Isaacson’s biography on Steve Jobs
For those of you who have never followed or read about Steve, this book may be a shocker. He was not a nice man, but he did get things done and was very successful. CEOs view him as a visionary business leader. I found some really great quotes that I like to highlight and share.
On motivation:
(Y)ou should never start a company with the goal of getting rich. Your goal should be making something you believe in and making a company that will last.
On impressions:
People DO judge a book by its cover. We may have the best product, the highest quality, the most useful software etc.; if we present them in a slipshod manner, they will be perceived as slipshod; if we present them in a creative, professional manner, we will impute the desired qualities.
A great Jonny Ive quote:
Steve and I care about things like that, which ruin the purity and detract from the essence of something like a utensil, and we think alike about how products should be made to look pure and seamless.
On Apple stores:
Jobs decided that Apple stores should have only one entrance, which would make it easier to control the experience.
On problems:
If something isn’t right, you can’t just ignore it and say you’ll fix it later,” he said. “That’s what other companies do.
On how ruthlessly focused he was:
“What are the ten things we should be doing next?” People would fight to get their suggestions on the list. Jobs would write them down, and then cross off the ones he decreed dumb. After much jockeying, the group would come up with a list of ten. Then Jobs would slash the bottom seven and announce, “We can only do three.” (more…)
The Wisdom Of Simplicity
“The art of art, the glory of expression and the sunshine of the light of letters, is simplicity.” ~ Walt Whitman
Life is simple; we only make it complex. We spend our lives unconsciously covering our authenticity with outer identity until at some point we begin wondering “where everything went wrong.” But the tragedy for many people is that the wondering never begins and life’s simple beauty is not rediscovered.
I use the word “rediscovered” because you already know that life can be simple because you experienced it as a child. If you are normal, you spent much of your life since then trying to become something other than yourself. But normal is not healthy; success in the unreal world means failure in the real one.
The power and virtue of simplicity is a universal truth; it’s wisdom applies to all areas of life. What are some ways you can declutter, simplify and return to your authentic Self? Here are a few ideas that can help.
- Instead of finding new things to add to your life, find things to remove.
- If you want to increase income, decrease expenses.
- Do less thinking and do more wondering.
- Turn down the noise.
- Go to the woods.
- Listen to a child. (more…)
10 Essential Trading Words
1. Simplicity – have a simple, well defined way to generate trading ideas. Have a simple approach towards the market. You can’t simply take everything into account when you try to make an educated decision. Filter the noise and focus on several key market components. For me, they are relative strength and earnings’ growth.
2. Common sense – create a trading system that is designed on the basis of proven trading anomaly. For example, trend following in different time frames.
3. Flexibility – be open to opportunities in both directions of the market. Be ready to get long and short.
4. Selectivity – chose only trades with the best risk/reward ratio; stocks with the best set ups; it doesn’t make sense to risk a dollar to make a dollar.
5. Don’t overtrade – two or three well planned trades in a week (month) might be more than enough to achieve your income goals. Patiently wait fot the right set up to form and offers good risk/reward ratio.
6. Exit strategy – Always, absolutelly always have an exit strategy before you initiate a trade. Know at which point the market is telling you that you are wrong and do not hesitate to cut your losses short immediatelly. Don’t be afraid or ashamed to take a trading loss. Everyone has them. Just make sure that you keep their size to a minimum.
7. Let’s profits run – one or two good trades might make your month. One or two good months might make your year. Letting profits run is as important as cutting losses short. Bigger winners will allow you the luxury to be right in less than half of the trades and still be profitable.
8. Consistency – Stick to your method of trading ideas’ generation.
9. Specialize – Specialize in one or two distinct setups. It could be a combination of technicals and fundamentals, certain timeframe or special event as a trading catalyst, certain sector or trading vehicle.
10. Have a plan – Which are stocks that you will be paying special attention to – this week, today. Why those stocks? In which direction you expect them to continue their move? What will give you a clue for the beginning of the move? Follow them exclusivelly and enter without a hesitation when they give you a signal. Don’t just wake up and sit in front of your monitor without having a clue what are you going to trade today.
10 Essential Trading Words
1. Simplicity – have a simple, well defined way to generate trading ideas. Have a simple approach towards the market. You can’t simply take everything into account when you try to make an educated decision. Filter the noise and focus on several key market components. For me, they are relative strength and earnings’ growth.
2. Common sense – create a trading system that is designed on the basis of proven trading anomaly. For example, trend following in different time frames.
3. Flexibility – be open to opportunities in both directions of the market. Be ready to get long and short.
4. Selectivity – chose only trades with the best risk/reward ratio; stocks with the best set ups; it doesn’t make sense to risk a dollar to make a dollar.
5. Don’t overtrade – two or three well planned trades in a week (month) might be more than enough to achieve your income goals. Patiently wait fot the right set up to form and offers good risk/reward ratio.
6. Exit strategy – Always, absolutelly always have an exit strategy before you initiate a trade. Know at which point the market is telling you that you are wrong and do not hesitate to cut your losses short immediatelly. Don’t be afraid or ashamed to take a trading loss. Everyone has them. Just make sure that you keep their size to a minimum. (more…)
Three Stages of Trading
These three are mutually inclusive. Without each working together to create the whole, managing your trading success will be difficult. Simple really but difficult to manage. But once managed very difficult to complicate.
ACTION + RESPONSE = COMPLICATED AS IT CAUSES CONFUSION
PREPARATION + ACTION = COMPLICATED AS IT CAUSES DOUBT
PREPARATION + RESPONSE = NOT POSSIBLE WITHOUT TAKING ACTION
PREPARATION + ACTION + RESPONSE = MANAGEABLE SIMPLICITY