10 lessons from the book: “How I Made $2,000,000 in the Stock Market” by Nicolas Darvas
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“There are no good or bad stocks, there are only rising and falling stocks.”
“I did not know it but I was already coming up against one of the great pitfalls of the small operator—the almost insoluble problem of when to enter the market.”
His answer was to entry on breakouts of momentum to the upside in stocks in uptrends.
“The truth was that as my pocket had strengthened, my head had weakened.”
Egos and emotions will destroy your ability to follow your strategy, stick to your plan.
“I listened eagerly to what they had to say and religiously followed their tips. Whatever I was told to buy, I bought. It took me a long time to discover that this is one method that never works.”
Talking heads & stock pickers are not the path to profitable trading, an edge is.
“Like human beings, stocks behave differently. Some of them are calm, slow, conservative. Others are jumpy, nervous, tense. Some of them I found easy to predict. They were consistent in their moves, logical in their behavior. They were like dependable friends.”
“There is no reason to sell a rising stock.”
He only sold when his trailing stop loss was triggered, creating massive wins in bull markets.
“I believe in analysis and not forecasting.”
He studied charts and traded momentum price action signals.
“Buy high and sell higher.”
He bought momentum at the moment of the breakout and sold at the end of a trend when it began to bend.
“I decided never again to risk more money than I could afford to lose without ruining myself.”
He traded only with speculative capital and position sized right.
“First check whether the market as a whole is rising or falling. In other words, are you in a bull market or a bear market? If the latter, stay out. The odds are against you.”
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Ten lessons from my book: “The Ultimate Guide to Candlestick Chart Patterns”
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The larger the candle, the higher the volatility of price action, and the smaller a candle is, the tighter a trading range has become. Increasing candle size indicates expanding volatility, while candles getting smaller shows contracting volatility.
Hammers have a higher probability of being a valid reversal signal when found inside a chart trending downward.
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.”
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.”
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.”