1. Never, under any circumstance add to a losing
position.... EVER, EVER! Nothing
2. Trade like a mercenary guerrilla. We must fight on the winning side and be willing to
change sides readily when one side has gained the upper hand. (There is nothing
wrong with switching from bullish to bearish and vice-versa,’ there
is
everything wrong with being stubborn’).
3. Capital comes in two varieties: Mental and that which is in your pocket or
account. Of the two types of capital, the mental is the more important and
expensive of the two. (Risk Management is vital, but at least equal is
self-management; learn to walk-away, ‘you can always fight another day’). Holding
to losing positions costs measurable sums of actual capital, but it costs
immeasurable sums of mental capital.
4. The objective is not to buy low and sell high, but to buy high and to sell higher. We can never
know what price is "low." Nor can we know what price is
"high." (Don’t be afraid to buy what you worry may be a top, it may
soon be a long way from being the top. This is a check on worrying about
looking stupid, in truth ‘no one else really cares’, remember
that!)
5. In bull markets we can only be long or neutral, and in bear markets we can only be short or
neutral. That may seem self-evident; it is not, and it is a lesson learned too
late by far too many. (Fighting trends saps a lot of mental energy,
see 3 above).
6. "Markets can remain illogical far longer than
you or I can remain solvent." Courtesy of
the inimitable John Maynard Keynes. - We like to
believe the market is full of people making rational logical decisions, think
again most of them are reacting to emotional impulses. (See our ‘Chimp Paradox article’ for some
further elaboration.)
7. Sell markets that show the greatest weakness, and
buy those that show the greatest strength. Metaphorically, when bearish, throw your rocks
into the wettest paper sack, for they break most readily. In bull markets, we
need to ride upon the strongest winds... they shall carry us higher than shall lesser
ones. (Such good advice, but so rarely heeded.)
8. Trading runs in cycles: some good; most bad. Trade large and aggressively when trading well;
trade small and modestly when trading poorly. In "good times," even
errors are profitable; in "bad times" even the most well researched
trades go awry. (This is very much about being in the zone, and hammering the
advantage when you can. It takes experience to get this one right)
9. To trade successfully, think like a fundamentalist;
trade like a technician. It is imperative that we
understand the fundamentals driving a trade, but also that we understand the
market's technical’s. When we do, then, and only then, can we or should we,
trade. (Personally, I don’t fully subscribe fully to this one, but then who am
I to question it.)
10. Keep your technical systems simple. Complicated systems breed confusion; simplicity
breeds elegance. In other words ‘Less is often more’, and ‘Simplicity
is beauty’
11. An understanding of mass psychology is often more
important than an understanding of economics. Markets are driven by human beings making human
errors and also making super-human insights. (Quite possibly the most
undervalued piece of advice, refer again to the ‘Chimp Paradox article,
markets are not being moved by thousands of Dr Spocks, but rather by the
impulsive whims of herding mammals and battling tribes.
12. Bear markets are more violent
than are bull markets and so also are their retracements. (In a bear market
everyone flees for the exit at the same time, liquidity is not guaranteed in
these times.)
13. Be patient with winning trades; be enormously impatient with losing
trades. Remember it is quite possible to make large sums
trading/investing if we are "right" only 30% of the time, as long as
our losses are small and our profits are large. (Advice as old as the markets
themselves.- Heed it)
14. The market is the sum total of the wisdom ... and
the ignorance...of all of those who deal in it; and we dare not argue with the
market's wisdom. If we learn nothing more than
this we've learned much indeed. (In other words ‘the market is always right’, it is
never wrong, but you are, often.)
15. Do more of that which is working and less of that
which is not: If a market is strong, buy
more; if a market is weak, sell more. New highs are to be bought; new lows
sold. (A variation on points 4 and 7 with an added twist, just shows
how important this is).,
16. The hard trade is the right trade: If it is easy to sell, don't; and if it is easy
to buy, don't. Do the trade that is hard to do and that which the crowd finds
objectionable. (If you are buying, and everyone else is long and buying, then
soon who will be left to buy, there is probably not much upside left: This takes
skill to get right, but the successful have normally perfect it. )
17. 'There is never one cockroach!’ This is a late addition to Gartman’s timeless
rules. – (I love this phrase, write it down somewhere visible and keep
reminding yourself about this.)
Good luck. Trading is never easy, only very few
make it through boot camp. If they have its likely they have adhered too many
of these rules. There is one other rule
however, which every great trader somehow manages to achieve: I don’t recommend
trying it until you are way past bootcamp. It is this one: ALL RULES ARE MEANT TO BE BROKEN: But they are to be broken only
rarely and true genius comes with knowing when, where and why!
Steven Goldstein is a leading Performance and Executive Coach working
with Traders, Banks and Hedge funds: He is Managing Director of at
Alpha R Cubed, which works with banks and investment firms to improve
their human capital within financial risk businesses. To know more about
Alpha R Cubed, visit their website www.alpharcubed.com or email Steven at steven.goldstein@alpharcubed.com.Follow Steven on Twitter and Linkedin. Join the flourishing LinkedIn group Trader, Trading & Risk Psychology.
.png)
.png)
In this article understand the most important thing, the item will give you a keyword rich link a great useful website page: 2mercados
ReplyDelete