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Wednesday, April 14, 2010

Market Wisdom

Extract from "Getting Started in Technical Analysis"
by Jack D Schwager

  1. First things first.
  2. Examine your motives.
  3. Match the trading method to your personality.
  4. It is absolutely necessary to have an edge.
  5. Derive a method.
  6. Developing a method is hard work.
  7. Skill versus hard work.
  8. Good trading should be effortless.
  9. Money management and risk control.
  10. The trading plan.
  11. Discipline.
  12. Understanding that you are responsible.
  13. The need for independence.
  14. Confidence.
  15. Losing is part of the game.
  16. Lack of confidence and time-outs.
  17. The urge to seek advice.
  18. The virtue of patience.
  19. The importance of sitting.
  20. Developing a low-risk idea.
  21. The importance of varying bet size.
  22. Scaling in and out of trades.
  23. Being right is more important than being a genius.
  24. Don’t worry about looking stupid.
  25. Sometimes action is more important than prudence.
  26. Catching part of the move is just fine.
  27. Maximize gains, not the number of wins.
  28. Learn to be disloyal.
  29. Pull out partial profits.
  30. Hope is a four-letter word.
  31. Don’t do the comfortable things.
  32. You can’t win if you have to win.
  33. Think twice when the market lets you off the hook easily.
  34. A mind is a terrible things to close.
  35. The markets are an expensive place to look for excitement.
  36. The calm state of a trader.
  37. Identify and eliminate stress.
  38. Pay attention to intuition.
  39. Life’s mission and love of the endeavor.
  40. The elements of achievement.
  41. Prices are nonrandom = Markets can be beaten.
  42. Keep trading in perspective.



Traits of a Successful Trader

  • Own methodology


  • Love trading


  • Independence


  • Confidence


  • Patience


  • Have an edge


  • Hard working


  • Effortless trading


  • Discipline


  • Disloyalty


  • Risk control



Quotable Quotes

The novice trader will ignore a failed signal, riding a position into a large loss while hoping for the best.


The more experienced trader, having learned the importance of money management, will exit quickly once it is apparent that he or she had made a bad trade.


The truly skilled trader will be able to do a 180-degree turn, reversing a position at a loss if market behavior points to such a course of action.


Human nature will do things that are comfortable but the market will pay the trader for being uncomfortable -
William Eckhardt


Market wizards do not do predictions. They just trade the market and react to the market. - Jack D. Schwager


The trend is your friend except at the end when it bends. Ed Seykota


It never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight! It is no trick at all to be right on the market.
Edwin Lefevre


The market is like a flu virus - as soon as you think you have it pegged, it mutates into something else.
Wayne H Wager


The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss and hope that his profit may become big profit.
Edwin Lefevre



There is no such thing as being right or beating the market. If you make money, it is because you understood the same thing the market did. If you lose money, it is simply because you got it wrong. There is no other way of looking at it.
Musawer Mansoor Ijaz


Every decade has its characteristic folly, but the basic cause is the same: people persist in believing that what has happened in the recent past will go on happening into the indefinite future, even while the ground is shifting under their feet.
George J Church


If making money is a slow process, losing it is quickly done. Ihara Saikaku

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