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It is far easier to funnel a vast amount of money from the masses to a few winners than for a few people to give out money to the majority. Any given game there are few winners So knowing that statistic, do you want to be in the majority or minority?“Do the hard thing” ~Richard Dennis They watch Blue Channels,They dont do Homework They lack one or two of these four-Money, Mind, Method & TargetThere is an important difference between being reactive and predictive. Trend traders never say “I think that market is going up so I’m going to buy it”. They buy when it goes up. “The price is always right.”
Understand first who you are as a trader. Do you like to daytrade? Do you prefer swing trading? What is your risk tolerance level? Everyone has a unique style and situation.
As a result, what might be a great entry point for a swing trader may turn out to be a not-so-good entry for a Day trader…? A trader with a low tolerance of risk might find that trade far too risky.
The key here is to know why you’re entering a trade, what it would take for you to exit (stop loss) and an appropriate target. These should all be determined BEFORE you enter the position. Many unsuccessful traders have one or two of these criteria figured out before they enter the trade. It’s the third one that derails them.
1. Always Insist on a Margin of Safety. Keep in mind that no asset class or stock sector or particular commodity is free from risk. Always think safety first, being right second. Your thesis may be correct on paper, but you can go broke along the way.
2. This Time Is Never Different. The four most dangerous words in investing are “this time is different” because these words set up false expectations. A new era does not mean the era is different in principle. It may simply be a wolf in different clothing.
3. Be Patient And Wait For your Trade. Many investors suffer from “action bias” or a desire to do something. However, when there is nothing to do the best thing to do is nothing.
4. Be Contrarian. The herd is usually wrong. The punch bowl of speculation is usually spiked with denial. Be careful getting in when the getting is at the end.
5. Risk Is Permanent Loss of Capital, Never A Number. Pay attention to valuation, fundamental, and financial risks and thus avoid permanent impairment of your capital.
6. Be Leery of Leverage. Leverage is a dangerous beast. It can’t turn a bad investment good, but it can turn a good investment bad. Whenever you see a financial product with leverage as its foundation you should be skeptical, not delighted.
7. Never Invest In Something You Don’t Understand. If something sounds too good to be true it probably is. If you do not understand where your money is going then don’t press the pedal ’cause the vehicle may be in reverse.
Invest when the law is on your side; otherwise you may find yourself on the other side of the barbed wire fence at BROKE prison.
– Be disciplined every day, in every trade, and the market will reward you. But don’t claim to be disciplined if you are not 100 percent of the time.
– Always lower your trade size when you’re trading poorly.
– Never turn a winner into a loser.
– Your biggest loser can’t exceed your biggest winner.
– Develop a methodology and stick with it. Don’t change methodologies from day to day.
– Be yourself. Don’t try to be someone else.
– You always want to be able to come back and play the next day. Once you reach the daily downside limit, you must turn your PC off and call it a day. You can always come back tomorrow.
– Earn the right to trade bigger. Remember: if you are trading poorly with two lots you must lower your trade size down to a one lot.
– Get out of your losers.
– The first loss is the best loss.
– Don’t hope and pray. If you do, you will lose.
– Don’t worry about news. It’s history.
– Don’t speculate. If you do, you will lose.
– Love to lose money. What I mean is to accept the fact that you are going to have losing trades throughout the trading session. Get out of your losers quickly. Love to get out of your losers quickly.
– If your trade is not going anywhere in a given timeframe, it’s time to exit.
– Never take a big loss. Only a big loss can hurt you. Consistency builds confidence and control.
– Learn to sweat out (scale out) your winners.
– Make the same type of trades over and over again? Be a bricklayer. Don’t over-analyze. Don’t procrastinate. Don’t hesitate. If you do, you will lose. All traders are created equal in the eyes of the market.
– It’s the market itself that wields the ultimate scale of justice.
It is far easier to funnel a vast amount of money from the masses to a few winners than for a few people to give out money to the majority. Any given game there are few winners So knowing that statistic, do you want to be in the majority or minority? “Do the hard thing” ~Richard Dennis They watch Blue Channels,They dont do Homework They lack one or two of these four-Money, Mind, Method & Target There is an important difference between being reactive and predictive. Trend traders never say “I think that market is going up so I’m going to buy it”. They buy when it goes up. “The price is always right.”
