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Wisdom is knowing the limits of your knowledge

  
Analysis, Education
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What does it mean to be wise? What is Wisdom?

One of the more interesting aspects to wisdom is self-awareness. “Thinking about wisdom,” writes Stephen Hall in his book Wisdom: From Philosophy to Neuroscience, “almost inevitably inspires you to think about yourself and your relationship with the larger world.” The book is an investigation into fuzzy questions such as how can it help us shed light on the process by which we deal with big decisions and dilemmas.

He writes:

Wisdom requires an experience-based knowledge of the world (including, especially, the world of human nature). It requires mental focus, reflecting the ability to analyze and discern the most important aspects of acquired knowledge, knowing what to use and what to discard, almost on a case by case basis (put another way, it requires knowing when to follow rules, but also when the usual rules no longer apply). It requires mediating, refereeing, between the frequently conflicting inputs of emotion and reason, of narrow self-interest and broader social interest, of instant rewards or future gains. Moreover, it expresses itself through an insistently social vocabulary of interactive behavior: a fundamental sense of justice (which is sometimes described as an innate form of morality, of knowing right from wrong), a commitment to welfare of social (and, for that matter, genetic) units that extend beyond the self, and the ability to defer immediate self-gratification in order to achieve the greatest amount of good for the greatest number of people. (more…)

The Overt & Covert Danger of Leverage

  
  Education
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Buying stocks with borrowed money doesn’t make anything a better investment or increase the probability of gains.

It merely magnifies whatever gains or losses may materialize. And then, leverage brings destruction if things go bad…really bad. And they often do.

Nassim Taleb says that we should judge people by the costs of the alternative, that is if history played out in another way.

As he wrote in his brilliant book Fooled by Randomness – “Clearly, the quality of a decision cannot be solely judged based on its outcome, but such a point seems to be voiced only by people who fail (those who succeed attribute their success to the quality of their decision).”

In the same way, be very careful of judging your stock market success by the outcome you achieve, but by the decision you made.

“Leverage can help me magnify my returns” is a great statement to make. But more often now, leverage – which is a result of arrogance created by good short-term returns or a result of survivorship bias, which is concentrating on the people or things that “survived” some process and inadvertently overlooking those that did not – will not only your destroy your savings and sleep, it will also destroy your reputation. (more…)

Getting Results While Ignoring the Noise

  
  Education
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  1. I am more concerned with keeping profits than making them. Anyone can get lucky and make money trading but only the skilled can hold onto that money over the long term.

  2. I am more concerned with how good a trader I will be a year from now than I am today. While I know what my skills are currently the upside of my futures skills is open ended based on my focus and work in this field.
  3. I am more concerned with my draw downs than my equity peaks. I know how to make capital grow and it is a much more pleasant task when I do not have to play catch up after a losing streak or trading too big.
  4. I am more concerned about what the chart is saying than what some talking head is saying on television or social media. The more they believe they have a crystal ball the more I try to avoid them.

  5. I am more concerned about whether my trailing stop or stop loss is triggered in a trade than about my own personal opinion about what may happen next. While the market is open I trade the plan I made when the market was closed regardless of what my emotions, opinions, and ego want me to do after entering a trade.

Patience in Trading

  
  Education
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The most important lesson I’ve learned over the years of trading is staying patient throughout the journey. There will always be loosing trades as well as winning trades, the key is not being greedy as well as staying consistently patient with the market whilst gaining experience.

Re-reading books, trading scripts as well as regularly topping up knowledge of all the relevant price action technicalities is crucial, although I’d say the main attribute to achieving consistent results is not only sticking to your own specific trading plan and rules, but remaining patient and never giving up. The use of repeated trading affirmations can help dramatically with this.

In the world of trading, those who remain patient over the years and ‘slowly but surely’ carve out a positive equity curve will surely gain the vital skills needed to make trading a full time, long term career.

Most traders have only the ‘destination’ in mind, with the ‘journey’ aspect as secondary. This is the wrong approach. Without the long journey testing your patience, including all the difficulties and hurdles, the destination would be too easy to obtain and everyone would be doing it. This is why learning to trade can be seen as easy, however its the journey that most amateur traders find too difficult to sustain. This can all be overcome with the right trading mindset and understanding.

:Anything that comes quick goes quick. Patience is required for outstanding results.

Traders :Don’t Blame the Market or Others

  
  Education
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  • When pain surfaces, if you are honest and in touch with yourself, you will own the upset and seize the opportunity to release that internal reality — to forgive! Pain functions to inform us of our errors.
  • False forgiveness is based on the belief that others are responsible for what we feel, and therefore it tends to reinforce that error. To forgive others, in this manner, for what happens in your mind leaves your pain intact and the opportunity to heal is lost.
  • Making use of every opportunity to heal is an important decision you can make and that decision will immeasurably accelerate your process.

Important goals for traders

  
  Education
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1) Risk management goals – Goals pertaining to trade sizing and drawdowns;

2) Idea generation goals – Goals pertaining to the process of generating sound trading ideas and formulating these into plans;

3) Execution goals – Goals pertaining to implementing trade ideas/plans so as to maximize reward and minimize risk;

4) Position management goals – Goals pertaining to the management of positions once they’re entered, including hedging and scaling in/out;

5) Portfolio management goals – Goals pertaining to achieving good diversification among ideas and allocating capital effectively to those ideas;

6) Self-management goals – Goals pertaining to maintaining a constructive mindset for optimal decision-making;

7) Personal, non-trading goals – Goals that reflect desired outcomes in areas of life outside trading that might spill over into trading performance, including physical fitness, relationships, spirituality, etc.

Law suit? Porn addict? Divorcing? Seeking investment ideas? Worried about the world?-Just Spare 5-10 minutes to read this sermon

  
  Education
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Jesus of Nazareth was a Jewish carpenter that was born about 2,000 years ago in Bethlehem, which is now a Palestinian city located in the central West Bank about 10 kilometers south of Jerusalem.  Over the course of a very short period of time (about a year) Jesus developed a large following as a miracle worker and religious teacher.  He was publicly executed by crucifixion around the year 35, and many millions believe the historical narrative that he was raised from the dead after three days in a tomb, and later ascended into the heavens.

Below is an English translation of one of Jesus’ very famous outdoor lectures, which was widely shared by his disciples that were present, and eventually written down circa 70-90. 

If you take 5-10 minutes to read this sermon, then you will know what being a Christian is actually supposed to mean. 

I like to read this first thing in the morning, immediately followed by a few minutes of meditation where I sit quietly listening.  I would not expect everything in the reading to speak to you, but I believe something will, as is always the case for me.

Jesus’ Sermon on the Mount

Excerpted the Gospel of Matthew – Chapters 5-7 (more…)

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