Ten lessons from the book “Trend Following” by @Covel
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“There are 4 kinds of bets. There are good bets, bad bets, bets that you win, & bets that you lose. Winning a bad bet can be the most dangerous outcome of all, because a success of that kind can encourage you to take more bad bets in the future, when the odds are against you.”
“We’re trying to exploit people’s reaction, which is embedded in prices and leads to trends.”
“Our best trading days are when we don’t trade.”
(Letting winners run or waiting for the right entry signal).
“Clarify trading and risk management systems until they can translate to computer code.”
“When designing a system, I believe it’s important to construct a set of rules that fit more like a mitten than like a glove.”
“Our job is to systematically sift price data to find trends and act on them and not let the latest news flashes sway our market opinions.”
“Markets may initially trend for fundamental reasons, but prices overshoot by ludicrous amounts. At some point, prices go up today simply because they went up yesterday.” - Michael Platt
“Science is about proving things wrong, it’s not about proving things right. What you’re trying to do is break your strategy.”
(Backtest, forward test, and beware of Black Swan events).
“Trading is a waiting game. You sit, you wait, and you make a lot of money all at once. Profits come in bunches. The trick when going sideways between home runs is not to lose too much in between.”
“Do not let emotions fluctuate with the up and down of your capital.”
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10 lessons from my book “New Trader, Rich Trader.”
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“You need to focus on a sound strategy, system, and trading plan and not profits. Good trading will create your profits, but focusing on your profits will usually lead to bad trading.”
“Before you place the trade, you need to have an exit strategy of how, when, and why you will take profits and what your stop loss will be. You have to plan to sell your stock at a specific percentage loss, price support breach, or trend change.”
10 lessons from the book “Market Wizards” by Jack Schwager
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“ A way to determine the direction of the general market is to focus on how the leading stocks are performing. If the stocks that have been leading the bull market start breaking down, that is a major sign the market has topped.”
“Another important factor to watch is the Federal Reserve discount rate. Usually, after the Fed raises the rate two or three times, the market runs into trouble.”
What is surprising is not the magnitude of our forecast errors,but our absence of awareness of it. This is all the more worrisome when we engage in deadly conflicts: wars are fundamentally unpredictable. Owing to this misunderstanding of the causal chains between policy & action
“It is impossible for our brain to see anything in raw form without some interpretation. We may not even always be conscious of it.”
Top lessons from “How to Make Money in Stocks: A Winning System in Good Times or Bad:
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“Be completely objective and recognize what the marketplace is telling you, rather than trying to prove that what you said or did yesterday or six weeks ago was right. The fastest way to take a bath in the stock market is to try to prove that you are right & the market is wrong.”
“The whole secret to winning big in the stock market is not to be right all the time, but to lose the least amount possible when you’re wrong.”
10 Top Lessons From the Book “Reminiscences of a Stock Operator”
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“A man must believe in himself and his judgment if he expects to make a living at this game.”
“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 my sitting. Got that? My sitting tight!”
Ed Seykota’s 10 Top Trading Principles that made him a fortune and a legend:
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Seykota was long through bull markets.
“If I am bullish, I neither buy on a reaction, nor wait for strength; I am already in. I turn bullish at the instant my buy stop is hit, and stay bullish until my sell stop is hit. Being bullish and not being long is illogical.”
Ed traded a system that fit his own personality.
“Systems don’t need to be changed. The trick is for a trader to develop a system with which he is compatible”