I want to pass these ideas to you out of the gratitude I have towards the great teachers who delivered me from my own ignorance during my initial years of struggle.
The bottom line here is that part of your success as a trader depends on to the extent to
which you're willing rely on objective analysis and use principles that go against the grain
of the establishment. What does the establishment teach? Review the content of magazines
such as Technical Analysis of Stock and Commodities and Futures. Look at the financial web
sites out there. You'll see these common themes:
1) Strategies and Techniques. There's always a hot new methodology that will somehow
improve your trading results. Success is from some external source, not something from within
yourself.
2) Predict the future. Figure the exact future dates when the market is likely to turn up or down.
Make a fortune buying bottoms and selling tops.
3) It's all in your head. No matter what your trading strategy is, you can succeed as long as you
have the right mental attitude.
While many of the ideas coming out of these themes may be valid and useful, they should not be
your main focus. If you were to start with a blank slate and allow your trading approach to be
completely reprogrammed, I'd upload the following into your brain:
• First start with money management. Understand the mathematics of how you optimize
incremental gains and keep losses to a minimum and have the discipline to apply in your
trading.
Secondly, focus on market selection. There's such a wide array of tantalizing, enticing, and
irresistible trading products that opening the financial section of the paper is like walking into a
Las Vegas casino. You've got Leaps, Diamonds, Spiders, sector funds for everything, options on
everything, not to mention a pump and dumpers pushing a wide array of penny stocks. Instead of
thinking that you're going to find the Holy Grail that will trade any of these vehicles successfully,
you've got instead focus on identifying the small number of markets whose characteristics make
their behavior most predictable.
Finally, once you've got a handle on money management and market selection, then apply the
best trading techniques that you have available.
The bottom line here is that part of your success as a trader depends on to the extent to
which you're willing rely on objective analysis and use principles that go against the grain
of the establishment. What does the establishment teach? Review the content of magazines
such as Technical Analysis of Stock and Commodities and Futures. Look at the financial web
sites out there. You'll see these common themes:
1) Strategies and Techniques. There's always a hot new methodology that will somehow
improve your trading results. Success is from some external source, not something from within
yourself.
2) Predict the future. Figure the exact future dates when the market is likely to turn up or down.
Make a fortune buying bottoms and selling tops.
3) It's all in your head. No matter what your trading strategy is, you can succeed as long as you
have the right mental attitude.
While many of the ideas coming out of these themes may be valid and useful, they should not be
your main focus. If you were to start with a blank slate and allow your trading approach to be
completely reprogrammed, I'd upload the following into your brain:
• First start with money management. Understand the mathematics of how you optimize
incremental gains and keep losses to a minimum and have the discipline to apply in your
trading.
Secondly, focus on market selection. There's such a wide array of tantalizing, enticing, and
irresistible trading products that opening the financial section of the paper is like walking into a
Las Vegas casino. You've got Leaps, Diamonds, Spiders, sector funds for everything, options on
everything, not to mention a pump and dumpers pushing a wide array of penny stocks. Instead of
thinking that you're going to find the Holy Grail that will trade any of these vehicles successfully,
you've got instead focus on identifying the small number of markets whose characteristics make
their behavior most predictable.
Finally, once you've got a handle on money management and market selection, then apply the
best trading techniques that you have available.
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