Just Today evening again completed reading this book and this was I think 10th time I had read this book.Iam telling you this is a Bible for Day Traders.
Here are some of the Quotes/Nuggets from this Book.Just spare some time and read them ……
Of course there is always a reason for fluctuations, but the tape does not concern itself with the why and wherefore.
My plan of trading was sound enough and won oftener than it lost. If I had stuck to it I’d have been right perhaps as often as seven out of ten times.
What beat me was not having brains enough to stick to my own game.
But there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily or sufficient knowledge to make his. play an intelligent play.
The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall
Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages.
It takes a man a long time to learn all the lessons of all his mistakes. (more…)
Archives of “wall street” tag
rssThe Alchemists of Wall Street
Ever wonder what goes on behind the scenes? What kind of thinking and reasoning goes behind creating those sophisticated financial trading forumlas that create billions of dollars every year? Even more, do you wonder what kind of math wizard it takes to create these formulas?
Quants, or quantitative managers, are the math wizards and computer programmers in the engine room of our global financial system who designed the financial products that almost crashed Wall st.
The credit crunch has shown how the global financial system has become increasingly dependent on mathematical models trying to quantify human (economic) behaviour. Now the quants are at the heart of yet another technological revolution in finance: trading at the speed of light.
Below is a pretty interesting video that reveals the type of people and thinking that goes into creating these forumlas.
Observation, Experience, Memory and Mathematics
“Observation, experience, memory and mathematics – these are what the successful trader must depend on. He must not only observe but remember at all times what he has observed. He cannot bet on the unreasonable or the unexpected, however strong his personal convictions may be about man’s unreasonableness or however certain he may feel that the unexpected happens very frequently. He must bet always on probabilities – that is, try to anticipate them. Years of practice at the game, of constant study, of always remembering, enable the trader to act on the instant when the unexpected happens as well as when the expected comes to pass.
“A man can have great mathematical ability and an unusual power of accurate observation and yet fail in speculation unless he also possesses the experience and the memory. And then, like the physician who keeps up with the advances of science, the wise trader never ceases to study general conditions, to keep track of developments everywhere that are likely to affect or influence the course of the various markets. After years of the game it becomes a habit to keep posted. He acts almost automatically. He acquires the invaluable professional attitude that enables him to beat the game – at times! (more…)
On Trading Psychology
From “Reminiscences of a Stock Operator” by Edwin Lefevre, the 1923 classic pseudo-autobiography of legendary trader Jesse Livermore:
… I didn’t always win. My plan of trading was sound enough and won oftener than it lost. If I had stuck to it I’d have been right perhaps as often as seven out of ten times. In fact, I always made money when I was sure I was right before I began. What beat me was not having brains enough to stick to my own game — that is, to play the market only when I was satisfied that precedents favored my play. There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily — or sufficient knowledge to make his play an intelligent play.
Sometimes the best play is to not play at all. When playing the market, you have to let the opportunities come to you, and take advantage of them when the odds are in your favor. If you don’t, you’ll get very frustrated — and you’ll lose money.
Mark Cuban Calls the Stock Market a “Platform for Hackers”
The following article from yesterday’s Wall Street Journal is a great follow up to my post from yesterday, Computers on Wall Street are Buying and Selling to Themselves!. Mark Cuban, who wrote software himself, may have a bit more knowledge on the matter than some D.C. prostitute regulator, so I am sure they have contacted him to get his thoughts on the matter. As I have said for years now, when the public loses all faith in their “leaders”(corporate and political), they lose faith in the system itself. No economy can ever dynamically grow and increase standards of living absent a belief in the rule of law. This is precisely why the U.S. will never be a strong, vibrant and upstanding society again until we take out our own trash, rather than pointing fingers abroad and blasting drones at civilians from 10,000 feet.
Key quotes from Mark Cuban on the computer dominated stock market:
I came to realize that the stock market no longer knew what business it was in. I wrote a blog that basically said that the markets for equities of all kinds had evolved to a platform for hackers.
As far as narrowing spreads, that’s absolutely true, but in absolute terms what does it translate into? For the individual investor it might save them a quarter a month. So what? Relative to the risk that’s the worst tradeoff in the history of tradeoffs (more…)
10 Favorite Quotes from Reminiscences of a Stock Operator
- There is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.
- The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among professionals.
- I never lose my temper over the stock market. I never argue the tape. Getting sore at the market doesn’t get you anywhere.
- They say you can never go poor taking profits. No, you don’t. But neither do you grow rich taking a four-point profit in a bull market. Where I should have made twenty thousand I made two thousand. That was what my conservatism did for me.
- Remember that stocks are never too high for you to begin buying or too low to begin selling.
- A man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing as he figured it must do. That is why so many men in Wall Street…nevertheless lose money. The market does not beat them. They beat themselves, because though they have brains they cannot sit tight.
- After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was the sitting. Got that? My sitting tight!
- Losing money is the least of my troubles. A loss never bothers me after I take it…But being wrong—not taking the loss—that is what does the damage to the pocketbook and to the soul.
- Prices, like everything else, move along the line of least resistance. They will do whatever comes easiest.
- The speculator’s chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when the market goes against you hope that every day will be the last day—and you lose more than you should had you not listened to hope—the same ally that is so potent a success-bringer to empire builders and pioneers, big and little. And when the market goes your way you become fearful that the next day will take away your profit, and you get out—too soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts…Instead of hoping he must fear; instead of fearing he must hope.
Market Wizard’s 25 Trading Clichés and Axioms to Follow, Memorize and Practice
- THE MARKET ITSELF IS THE ULTIMATE WEILDER OF JUSTICE. JUDGE, JURY AND PROSECUTOR.
- RECIPE TO LOSE FOR SURE: OVER-ANALYZE, PROCRASTINATE, HESITATE.
- LEARN TO SWEAT OUT, HANG ON TO AND SCALE OUT OF YOUR WINNERS.
- HIT SINGLES AND DOUBLES, NOT HOMERUNS. THE HOMERUNS ARE USUALLY THE RESULT OF GOOD TRADING AFTER A PROFITABLE TRADE HAS STARTED TO MAKE ITS MOVE
- A BIG LOSS CAN DESTROY YOU. IS RISK WORTH TOTAL DESTRUCTION?
- LOVE TO LOSE MONEY. NOT BECAUSE YOU’RE AN IDIOT, BUT BECAUSE LOSING MONEY IS AN IMMEDIATE FEEDBACK MECHANISM. EMBRACE THE SIGNAL AND DITCH THE TRADE.
- NEWS IS HISTORY. THIS IS THE MOST IMPORTANT AND LEAST OBSERVED RULE. DAYTRADING ARCADES UP AND DOWN WALL STREET HAVE DOZENS AND DOZENS OF LCD’S TUNED TO ONE STATION, CNBC. BY THE TIME THEY PUKE IT OUT, IT’S ABOUT 7 TO 12 HOURS OLD. THERE IS NO SUCH THING AS “BREAKING NEWS” ANYMORE. SOME TRADERS TELL ME THEY TUNE IT OUT. YOU CAN’T. IT GETS INTO YOUR SUBCONSCIOUS AND AFFECTS YOUR TRADING. PUT YOURSELF ON A TOTAL NEWS BLACKOUT FOR A WHILE AND SEE WHAT HAPPENS TO YOUR RESULTS. LOSE TOUCH WITH THE REST OF THE WORLD. ISOLATE YOURSELF TO YOUR ALGORITHMS, DATA, CHARTS AND MASTERING YOUR TRADING PLATFORM. AND IF YOU WORK FOR A FIRM WITH DOZENS OF LCD’S TUNED TO CNBC, MAINLY SO THAT THEIR “GUY” WHO IS ON ONCE A WEEK IS SEEN AND HEARD BY EVERYONE AT THE FIRM. THIS PERSON RARELY KNOWS HOW TO TRADE. I KNOW OF A FEW FIRMS OUT THERE LIKE THIS.
- THE FIRST LOSS IS THE BEST LOSS BECAUSE IT HURTS THE MOST. LEARNING TO LOSE IS IMPORTANT. LEARNING TO LOSE AS LITTLE AS POSSIBLE IS THE MARKET’S PAVLOVIAN WAY OF TEACHING YOU HOW TO TRADE PROFESSIONALLY AND PROFITABLY
- EARN THE RIGHT TO TRADE BIGGER. YOU’LL KNOW WHEN YOU’RE READY. DON’T RUSH IT. THE BIGGER YOU GET, THE MORE IMPORTANT EXECUTION STRATEGY BECOMES. YOU DON’T WANT TO BE SLOPPY, LIKE MOST PEOPLE I’VE MET, EVEN THOSE THAT WERE SO CALLED MENTORS TO ME, OR WHO I CALLED “MAESTRO”. SLOPPIEST TRADER IN THE WORLD. TINY ORDERS LEAVING ELEPHANT FOOTPRINTS WHILE SMART TRADERS TAKE MAMMOTH ORDERS AND DON’T MAKE A RIPPLE
- BE YOURSELF. DON’T TRY TO BE SOMEONE ELSE. FIND THE STRATEGY THAT WORKS FOR YOUR PSYCHE. IT TAKES WORK, READING, TESTING, AND INNER-REFLECTION. YOUR CHARACTER HAS THE CORRECT STRATEGY OUT THERE. YOU HAVE TO FIND IT. DON’T TRADE WHAT SOME SCHMUCK WANNABE HEAD TRADER AT A SHADY FIRM TELLS YOU TO TRADE, OR USE A STRATEGY TAUGHT BY A FIRM THAT LETS YOU ONLY TRADE THAT STRATEGY. GET OUT OF THESE FIRMS. (more…)