1. Markets tend to return to the mean over time.
2. Excesses in one direction will lead to an opposite excess in the other direction.
3. There are no new eras – excesses are never permanent.
4. Exponential rising and falling markets usually go further than you think.
5. The public buys the most at the top and the least at the bottom.
6. Fear and greed are stronger than long-term resolve.
7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chips.
8. Bear markets have three stages.
9. When all the experts and forecasts agree – something else is going to happen.
10. Bull markets are more fun than bear markets.
Archives of “three stages” tag
rssThree 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
Three stages of trading objectives.
To make money every trade. At first, I did not have the ability to make money every trade. After I had the ability to make money on most trades I realized it was a horrible objective. If you want to make money on every trade you are always waiting. You can never take that much risk and hence the rewards are very small. I was trading 1′s and 2′s to start, which was the right thing to do. I would watch my mentor take every trade, no matter how dog shit it was. As a 1 and 2 lot trader you do not have the same luxury to take dog shit trades because you can only trade one way. Because of the flexibility he had he could do more and the truth is no matter how good or bad a trade looks we don’t know until we are in it. Getting the most out of a trade is the mark of good trader. Risk is always related to reward. There is very little money in making money on every trade. This type of trading is like making 100k and keeping 80K
To make huge chunks of money. After I realized that objective did not work for me I shifted to the extreme. I started to swing for the fences whenever I had the ability. It is nice when I was right but I struck out a lot too. At this point, I did not respect trading. I did it because money made me a bad ass. Well as you know you hard to pay your bills with bad ass. This type of trading is like making 200k and keeping 80k.
Here are the major risks of having both of those objectives. The first is making small amounts of money no matter the situation. Eventually you will get in a hole because statistically you are behind. Trading every situation the same is bad. The second objective is trying to make huge amounts of money on every trade. If the first trades were the best and I stopped it was great. If the first trades were bad, I was forced to stop. It made it hard to learn.
10 Trading Lessons
1. Markets tend to return to the mean over time.
2. Excesses in one direction will lead to an opposite excess in the other direction.
3. There are no new eras – excesses are never permanent.
4. Exponential rising and falling markets usually go further than you think.
5. The public buys the most at the top and the least at the bottom.
6. Fear and greed are stronger than long-term resolve.
7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chips.
8. Bear markets have three stages.
9. When all the experts and forecasts agree – something else is going to happen.
10. Bull markets are more fun than bear markets.
10 Lessons
1. Markets tend to return to the mean over time.
2. Excesses in one direction will lead to an opposite excess in the other direction.
3. There are no new eras – excesses are never permanent.
4. Exponential rising and falling markets usually go further than you think.
5. The public buys the most at the top and the least at the bottom.
6. Fear and greed are stronger than long-term resolve.
7. Markets are strongest when they are broad and weakest when they narrow to a
handful of blue-chips.
8. Bear markets have three stages.
9. When all the experts and forecasts agree – something else is going to happen.
10. Bull markets are more fun than bear markets.
Ten Trading Lessons
1. Markets tend to return to the mean over time.
2. Excesses in one direction will lead to an opposite excess in the other direction.
3. There are no new eras – excesses are never permanent.
4. Exponential rising and falling markets usually go further than you think.
5. The public buys the most at the top and the least at the bottom.
6. Fear and greed are stronger than long-term resolve.
7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chips.
8. Bear markets have three stages.
9. When all the experts and forecasts agree – something else is going to happen.
10. Bull markets are more fun than bear markets.