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7/17/2019 Market Quotes

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MARKET QUOTES

FOREWARD

The share market essentially refects the attitude and exectati!ns !"

market articiants in res!nse t! the emer#in# $nancial and ec!n!mic

en%ir!nment& 'e!le tend t! (e uni%ersally #reedy )hen they think the

share rice )ill rise and c!n%ersely* their m!!d can easily turn t! "ear

and anic i" they are su+ciently ersuaded that share rices )ill "all&

,uman nature is the same in all markets the )!rld !%er& -y market

articiants* )e re"er t! traders and in%est!rs& Traders "!cus their

attenti!n !n intra.day and intra.)eek market acti%ity& Their time h!ri/!n

is rarely l!n#er than a c!ule !" )eeks& They tend t! trade in thederi%ati%e markets such as the )arrants* 0FD1s* SSF1s and the "utures

and !ti!ns markets& As a result* they must (e hi#hly discilined and

2uick t! rec!#nise a mistake* !r they )ill s!!n (e )ied !ut $nancially&

The %ast ma3!rity !" traders use technical analysis as a (asis "!r makin#

their decisi!ns& While traders are s!lely interested in caital #ains* the

in%est!r als! c!nsiders current and "uture inc!me streams in the "!rm !"

di%idends )hen makin# a decisi!n& The time h!ri/!n !" in%est!rs is much

l!n#er* usually sannin# at least t)! years* !"ten much l!n#er& As a rule*

in%est!rs are m!re c!nser%ati%e* takin# "e)er risks than traders and use

m!re "undamental analysis as a (asis "!r makin# their decisi!ns& E%en

th!u#h the risks that each tye !" market articiant is )illin# t! take* as

)ell as the rele%ant time h!ri/!ns* are di4erent* the rinciles !" market

sych!l!#y are essentially the same& This less!n c!%ers %ari!us sh!rt

market 2u!tes and insi#hts int! these rinciles&

AD560E

7Ad%ice is )hat )e ask "!r )hen )e already kn!) the ans)er (ut )ish

)e didn1t&7 . Erica 8!n#

ASSET A99O0AT6O:

7We are "!cused !n "!ur sect!rs that ha%e exhi(ited un%aryin# demand

re#ardless !" ec!n!mic acti%ity and that ha%e key "undamental stren#ths

that hel exlain )hy they1%e (een ar!und "!r hundreds !" years& The

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inherent demand !" e!le t! sm!ke* drink and #am(le ; is clearly h<

and l!n#.lastin#&7 . 0harles :!rt!n

7The industrial ec!n!mies !" the ast* )here y!u 3ust needed a "e)

hi#hly educated e!le )hile the %ast ma3!rity !" e!le )ere )!rkin#

!n r!ducti!n lines !r deli%erin# stu4* are (ein# turned !n their heads&:!) nearly the entire !ulati!n needs trainin# and that1s !nly #!in# t!

make the demand "!r educati!nal ser%ices that much (etter&7 . =uy Sier

7There is s!methin# ine%ita(le t! me a(!ut 7!siti!nal7 >luxury? #!!ds&

The m!re y!u r!ser* the m!re narr!) the uni%erse !" items thr!u#h

)hich y!u can exress y!ur r!serity&7 . Th!mas Russ!

7We1%e had c!nsidera(le success in (uyin# techn!l!#y c!manies that

ha%e #reat (alance sheets& 0!manies like this ha%e the fexi(ility t!

in%est in ne) initiati%es* (uy ne) techn!l!#y and in%est in research and

de%el!ment& E%en i" they aren1t r!$ta(le t!day* y!u ha%e the !tential

"!r a #!ld mine i" the (usiness turns ar!und&7 . 8!hn -uckin#ham

7Real estate is a natural "!r %alue in%estin# ; real estate c!manies

tyically ha%e identi$a(le hard assets that are relati%ely easy t! %alue

(ased !n a sum.!".the.arts analysis t! arri%e at a net asset %alue y!u

can c!mare )ith the current st!ck rice& >-ut? )e1%e ne%er (een that

"!nd !" the h!tel (usiness (ecause the tenants m!%e !ut e%ery ni#ht&

That makes the (usiness susceti(le t! ec!n!mic s)in#s in a )ay that

!+ce (uildin#s )ith l!n#. term leases t! credit.)!rthy tenants aren1t&7 .Michael Winer

7=!ld kind !" scares me (ecause %ery !"ten the e!le in%!l%ed )ith it

seem t! (e sli#htly insane& My !ther r!(lem is that 6 d!n1t kn!) h!) t!

%alue it&7 . 8ames M!ntier

7We1re )illin# t! !)n #!ld e%en th!u#h it may n!t act as a hed#e in the

near "uture* (ecause )e ha%e a "airly clear %isi!n a(!ut )hat )ill haen

t! infati!n three* "!ur !r $%e years !ut* and it1s n!t a retty si#ht&7 .

0harles de 5aulx

76 ha%e al)ays had an a+nity "!r c!manies that make thin#s& We "a%!urc!manies )ith transarent (usinesses that )e can understand "airly

2uickly and th!se that ha%e lar#e* recurrin# maintenance* reair and

!%erhaul re%enues&7 . Alexander R!eers

7We d!n1t like (usinesses that are c!mletely reliant !n human caital

that can )alk !ut the d!!r& We ha%e n! rule a#ainst it* (ut y!u #enerally

)!n1t $nd us in%estin# in thin#s like in%estment (anks !r c!nsultin#

$rms&7 . D!nnell :!!ne



7The lack !" in%estment in de%el!in# ener#y res!urces )as s! r!"!und

"!r s! l!n# that )e exect t! see inelastic* hi#her rices "!r a %ery l!n#

time* re#ardless !" the "all in !il rices !" late&7 . 8!hn -ur(ank

A5O6D6:= -UR:OUT

76" y!u are )!rkin# and er"!rmin# hard* then y!u sh!uld take #reat care

n!t t! (urn!ut& @!u can a%!id mental (urn!ut (y ensurin# that y!ur daily

r!utine remains "un there is a limit t! y!ur mental ener#y that y!u

sh!uld resect& As y!u #et (etter at s!methin#* e!le )ill )ant m!re

and m!re !" y!ur time* and )ill rely !n y!u m!re and m!re& 6t is easy "!r

c!mmitments t! #et (i##er and (i##er e!le tend t! (e 2uite hay t!

c!nsume !ther e!le1s mental res!urces )ith!ut )!rryin# a(!ut thec!nse2uences&7 . S!urce Unkn!)n

ATT6TUDE

7There1s n!thin# remarka(le a(!ut it& All !ne has t! d! is hit the ri#ht

keys at the ri#ht time and the instrument lays itsel"&7 . 8!hann Se(astian

-ach

7T! di4erent minds* the same )!rld is a hell* and a hea%en&7 . Ralh

Wald! Emers!n

7Ad!tin# the ri#ht attitude can c!n%ert a ne#ati%e stress int! a !siti%e

!ne&7 . ,ans Selye

7Each !" us makes his !)n )eather* determines the c!l!ur !" the skies in

the em!ti!nal uni%erse )hich he inha(its&7 . -ish! Fult!n 8& Sheen

AWARE:ESS

7What is necessary t! chan#e a ers!n is t! chan#e his a)areness !"

himsel"&7 . A(raham Masl!)

-EAT6:= T,E MARKET

7The task !" (eatin# the market is n!t di+cult& 6t is the 3!( !" (eatin#

!ursel%es that r!%es !%er)helmin#&7. Martin 'rin#

76t is the di4erence !" !ini!n that makes h!rse races&7. Mark T)ain

7What1s really 2uite remarka(le in the in%estment )!rld is e!le arelayin# a #ame )hich* in s!me sense* cann!t (e layed& There are s!



many e!le !ut there in the marketB the idea that any sin#le indi%idual

)ith!ut extra in"!rmati!n !r extra market !)er can (eat the market is

extra!rdinarily unlikely& @et the market is "ull !" e!le )h! think they

can and "ull !" !ther e!le )h! (elie%e them& This is !ne !" the #reat

mysteries !" $nance )hy d! e!le (elie%e they can d! the im!ssi(leCWhy d! !ther e!le (elie%e themC7 . Daniel Kahneman

76" y!u kne) )hat )as #!in# t! haen in the ec!n!my* y!u still

)!uldn1t necessarily kn!) )hat )as #!in# t! haen in the st!ck

market&7. Warren -u4ett

7Desite the s!lemn im!rt that "und c!manies attri(ute t! ast

er"!rmance* there1s n! e%idence that the )h! (eat the index !)e

their rec!rd t! anythin# !ther than rand!m statistical %ariati!n& The

)h!le industry is (uilt u ar!und a certain de#ree !" (lack ma#ic&7.

F!rtune Ma#a/ine

76t1s n!t that st!ck rices are carici!us& 6t1s that the ne)s is carici!us&7.

-urt!n Malkiel

7A"ter takin# risk int! acc!unt* d! m!re mana#ers than y!u1d see (y

chance !uter"!rm )ith ersistenceC 5irtually e%ery ec!n!mist )h!

studied this 2uesti!n ans)ers )ith a res!undin# n!& Mike 8ensen in the

Sixties and Mark 0arhart in the :ineties (!th c!nducted exhausti%e

studies !" r!"essi!nal in%est!rs& They each c!ncluded that in #eneral a

mana#er1s "ee* and n!t his skill* lays the (i##est r!le in er"!rmance&7 .Eu#ene Fama

7This decade is stre)n )ith examles !" (ri#ht e!le )h! th!u#ht they

(uilt a (etter m!usetra that c!uld c!nsistently extract a(n!rmal returns

"r!m the $nancial markets& S!me succeed "!r a time& -ut )hile there

may !ccasi!nally (e misc!n$#urati!ns am!n# market rices that all!)

a(n!rmal returns* they d! n!t ersist&7. Alan =reensan

761m !"ten accused !" 7disem!)erin#7 e!le ; 6 re"use t! #i%e

credence t! any!ne1s h!e !" (eatin# the market&7 . 8asen )ei#

7Why d!es indexin# !utman!eu%re the (est minds !n Wall StreetC'arad!xically* it is (ecause the (est and (ri#htest in the $nancial

c!mmunity ha%e made the st!ck market %ery e+cient& When in"!rmati!n

arises a(!ut indi%idual st!cks !r the market as a )h!le* it #ets refected

in st!ck rices )ith!ut delay* makin# !ne st!ck as reas!na(ly riced as

an!ther& Acti%e mana#ers )h! "re2uently shi"t "r!m security t! security

actually detract "r!m er"!rmance (y incurrin# transacti!n c!sts&7 .

-urt!n Malkiel

7Ec!n!mists* )hen "aced )ith a c!nfict (et)een the!ry and e%idence*

discard the the!ry& St!ck(r!kers discard the e%idence&7. Andre) Smithers



76t1s a (i# lie that* reeated !"ten en!u#h* is e%entually acceted as the

truth& @!u can (eat the market* tr!unce the a%era#es* !utace the index*

(eat the street& An entire industry st!kes this "antasy&7 8!nathan

0lements

-RA6:S

76 n!t !nly use all the (rains 6 ha%e* (ut all that 6 can (!rr!)&7 . ,!l(r!!k

8acks!n

0ERTA6:T@

7E%en i" y!u1re !n the ri#ht track..y!u1ll #et run !%er i" y!u 3ust sit there&7

. Arthur =!d"rey

7T! (e a(s!lutely certain a(!ut s!methin#* !ne must kn!) e%erythin# !r

n!thin# a(!ut it&7. Olin Miller

0,A:=6:= MARKETS

7The markets are the same n!) as they )ere $%e !r ten years a#!

(ecause they kee chan#in# . 3ust like they did then&7 . Ed Seyk!ta76t is n!t necessary t! chan#e& Sur%i%al is n!t mandat!ry&7 . W& Ed)ards

Demin#

0OMM6TME:T

7Traders* like athletes and artists* need t! create a certain state !" mind

in )hich t! success"ully ractice their cra"t& The (est traders rec!#nise

the sych!l!#ical arad!xes inherent in tradin#& The tradin# en%ir!nmentis 2uite di4erent "r!m the en%ir!nment !" !ur e%eryday li%es& 6n li"e* !ur

"ears hel teach us t! a%!id ain"ul exeriences& -ut in tradin#* the "ear

!" l!sin# m!ney !r makin# a mistake can actually create the %ery

circumstances !ne tries t! a%!id& T! the tradin# mind* the ursuit !"

tradin# !!rtunities is a c!ntinu!us challen#e& One can (e c!m"!rta(le

)ith the risk !" l!ss i" the trade )as (ased !n a #!!d idea (ut

ne%ertheless turned !ut (adly due t! un"!reseen circumstances !r a

sudden m!%e in the market& Fr!m this ersecti%e* missin# a #!!d

!!rtunity is mentally and $nancially e2ual t! (ein# !n the )r!n# side!" a trade&7 . The Mind !" the Markets* (y F& 8& 0hu



7The character !" a ers!n is in direct r!!rti!n t! his c!mmitment t!

excellence&7 . 5ince 9!m(ardi

7The %ast ma3!rity !" e!le )ant m!re m!ney in !rder t! #ain !)er*

"reed!m* !r c!ntr!l& -ut )hat d!es that si#ni"yC D!es it !int t! the need

"!r sel".su+ciencyC The "rustrati!n !" relati!nshis )ith !thersC Thedesire "!r a #uarantee "r!m "ailure and tra#edyC Merely )antin# t!

accumulate m!re m!ney is n!t unhealthy er se* (ut !ssessin# m!ney

as !ne1s central m!ti%ati!n in li"e certainly is& M!ney is an inade2uate

anacea "!r all these !ssi(le and im!ssi(le dreams (ecause it is !nly

)!rth )hat it can actually (uy& With!ut a (alanced %ie)* t!! many

e!le send t!! much time in the l!nely ursuit !" c!untin# their

m!ney&7 . F& 8& 0hu* The Mind !" the Markets

7D! n!t l!!k "!r ma#ic systems& D! n!t l!!k "!r the la/y man1s )ay t!

riches&&&Read* study* listen* and think& 0!mare and c!mare& Make lists

!" r!s ands c!ns& Make u scenari!s& Make u !!site scenari!s&

0!mare& When y!u #et c!n"used* (ack a)ay& Start a#ain& Watch& 9isten&

0!mare& :e%er "!rce a c!nclusi!n& O(ser%e* c!mare* and )ait&7 .

D!nald W!rden* Trader1s Mani"est!

7When )e ha%e c!n%icti!n . )hen all the ieces seem t! $t . then )e

ha%e t! #! "!r it& We ha%e t! c!mmit !ursel%es* "!r this act !"

c!mmitment is as much an essential in#redient !" success in tradin# as

risk.c!ntr!l& What )e say )hen )e c!mmit !ursel%es is 1this !siti!n canl!se* like any !siti!n& We must ha%e a c!ntin#ency lan "!r #ettin# !ut

ec!n!mically& -ut it1s an exceti!nally #!!d !siti!n and it1s n!t #!in# t!

l!se&1 And )hen all the ieces $t* )e sh!uld (et !ur $nal stake strai#ht

!4* in my %ie)& That )ay )e (et m!st )hen the !dds are (est* i&e& )hen

the risk is l!)est&7 . 8!hn 'erci%al* The Way !" the D!llar

7We d! (etter in the l!n# run (y %ie)in# the st!ck market as a 1h!me

(ase1* rather than as a tri t! the casin!& 6" )e trade st!cks e%ery time

they m!%e a !int !r t)!* c!ntinually "all sh!rt* deal !nly in !ti!ns* !r

trade in "utures* !ur dreams !" a (i# )in may mask !ur increased risk !"e%entual . !r e%en "re2uent . l!ss&7 . =ary M!!re* Siritual 6n%estments

76t ne%er entered my mind t! sit (ack and say* 16 can1t d! it&1 6 had such a

tremend!us aetite t! excel and t! #ras all that there )as t! kn!) t!

(e the (est there is& This attitude is such a m!ti%ati!nal "!rce in my li"e

n! matter )hat 6 d!& My learnin# in%!l%ed #reat sacri$ce& 6 sent l!ts !"

e%enin#s h!me al!ne& F!r me t! #! han# !ut at the u( )ith the #an#

3ust didn1t cut it& 6 )!uld rather (e at h!me )ith my charts* )hich

(r!u#ht me #reat satis"acti!n& 6t is s!methin# that 6 still l!%e t! d!&7 .

Dan an#er



7Statistics and s!ciety may redict* (ut y!u al!ne determine )hether y!u

)ill succeed !r "ail& @!u al!ne are in c!ntr!lB take res!nsi(ility "!r y!ur

er"!rmance and y!ur li"e& There are al)ays tremend!us !!rtunities in

the markets& 6t is n!t )hat haensB it is )hat y!u d! )ith )hat haens

that makes the di4erence (et)een r!$t and l!ss&7 . Ed)in 9e"e%re*Reminiscences !" a St!ck Oerat!r

7The $rst thin# is t! l!%e y!ur s!rt& :e%er d! it t! lease s!me!ne else&

6t has t! (e y!urs&7 . 'e##y Flemin#

7All #reat traders initially exerience #reat di+culty and "rustrati!n* (ut

)hat sets them aart is that they ne%er all!)ed themsel%es t!

exerience "ailure& That is t! say* they re"used t! reresent their tradin#

exerience* n! matter h!) ne#ati%e* as ers!nal "ailure &&&We )!uld like

t! share s!me!ne1s li"e hist!ry )ith y!u

At the a#e !" <G he "ailed in (usiness&

At the a#e !" << he l!st a state le#islati%e race&

At the a#e !" < he "ailed in (usiness a#ain&

At the a#e !" <H his l!%er died&

At the a#e !" <I he had a ner%!us (reakd!)n&

At the a#e !" J he l!st a c!n#ressi!nal race&

At the a#e !" JH he l!st an!ther c!n#ressi!nal race&

At the a#e !" he l!st a senat!rial race&

At the a#e !" L he a#ain l!st a senat!rial race&

-ut at the a#e !" < he )as elected 'resident !" the United States&

This )as A(raham 9inc!ln&

R!(ert K!el and ,!)ard A(ell* The 6nner =ame !" Tradin#76 trade "!r

the thrill !" %ict!ry& This is the #reatest 3!( in the )!rld& Where else can

y!u (e al!ne in y!ur h!me* )atchin# y!ur m!nit!rs* n!t ha%in# t! $#ht

tra+c* and n!t ha%in# a (!ss 61m c!nstantly intri#ued all day l!n# and

ne%er (!red& 6 can1t )ait "!r the day t! start and 61m %ery sad t! see the

day end& 6 3ust l!%e this )!rk s! much7 . Dan an#er

76n the early sta#es !" y!ur tradin# career* d!n1t )!rry t!! much a(!ut

)hether y!u sh!uld (uy !r sell* (ut rather a(!ut h!) y!u1%e executed

)hate%er trade y!u1%e made& @!u1ll learn m!re "r!m y!ur trades that

)ay&7 . 8& 'eter Steidlmayer* Steidlmayer !n Markets

78ust like small $res create small am!unts !" heat* )eak desires #enerate)eak results& -ut )hen a !)er"ul desire statement trans"!rms that



small $re int! a ra#in# in"ern!* it can ut y!u !n the "ast track t!)ard

acc!mlishin# y!ur #!als& 6t )ill r!duce an 16 )ant t!1 attitude that is s!

intense that it dramatically increases the likelih!!d !" dreams (ec!min#

real&7 . Kenneth -aum* The Mental Ed#e

7&&&t! tell s!me!ne 1D!n1t (uy a st!ck !n a h!t ti1 . ad%ice )ith )hich n!exert )!uld disa#ree . 3ust isn1t en!u#h* (ecause it i#n!res the 2uesti!n

!" )hy e!le "eel inclined t! act !n th!se tis in the $rst lace& D!es

Alc!h!lics An!nym!us reach !ut t! its mem(ers (y merely sayin# 1St!

drinkin#*1 as i" th!se )!rds al!ne )ill d! the trickC O" c!urse n!t* and the

same rinciles aly t! the in%estment )!rld @!u can1t (reak y!ur (ad

ha(its )ith!ut kn!)in# a little m!re a(!ut them&7 . Derrick :iederman*

The 6nner =ame !" 6n%estin#

76 think )hen y!u #r!) u and ha%e a l!t !" li"e exerience )ith

ad%ersity and learn )ays t! !%erc!me them y!u are c!n$dent that n!

matter h!) (ad the situati!n is y!u tell y!ursel"* 76 can sur%i%e&7 6 can

think !" c!untless times in tradin# )here thin#s )ere ad%erse* (ut i" 6

didn1t ha%e the ri#ht attitude* 6 )!uld ha%e crum(led and )alked a)ay

and ne%er ha%e (een a(le t! c!me (ack&7 . R!(ert K!el and ,!)ard

A(ell* The 6nner =ame !" Tradin#

7:! matter )hat y!u d!* such as (ec!min# a d!ct!r* y!u ha%e t! ut in

many* many years !" little inc!me and l!n#* hard h!urs t! succeed&

While learnin#* 6 used t! ut in any)here "r!m thirty t! sixty h!urs a)eek "!r six years s!lid (e"!re (ec!min# a c!nsistent m!ney )inner& 61d

c!nstantly #! (ack and learn "r!m my mistakes chart attern mistakes*

trend line mistakes* timin# mistakes* all kinds !" mistakes& This )h!le

acka#e has t! (e ut t!#ether t! c!me u )ith the ri#ht st!cks at the

ri#ht time that make the (i#* (i# m!%es&7 . Dan an#er

761ll (e here until 6 die& E%en i" 6 had $"ty milli!n d!llars* )hat else am 6

#!in# t! d!C This is )hat 6 l!%e t! d!& 6 think th!se e!le )h! c!me in

and say that they )ant t! make a milli!n d!llars* !r ten milli!n d!llars*

and then lan t! 2uit are the e!le )h! ne%er make that much m!ney(ecause they ha%e the )r!n# "!cus& They ha%e a "!cus !n (ein# d!ne

)ith it* s! they1ll (ec!me m!re a##ressi%e than they need t! (e& They1ll

take stuid trades (ecause they "eel really rushed and d!n1t )ant t! (e

here& Whereas* my #!al is that 6 al)ays )ant t! (e here&7 . -rand!n

Fredricks!n

7The less y!u kn!)* the m!re y!u (elie%e&7 N -!n!* U<

7Tae readin# )as an im!rtant art !" the #ameB s! )as (e#innin# at

the ri#ht timeB s! )as stickin# t! y!ur !siti!n& -ut my #reatest

disc!%ery )as that a man must study #eneral c!nditi!ns* t! si/e them s!



as t! (e a(le t! anticiate r!(a(ilities& 6n sh!rt* 6 had learned that 6 had

t! )!rk "!r my m!ney& 6 )as n! l!n#er (ettin# (lindly !r c!ncerned )ith

masterin# the techni2ue !" the #ame* (ut )ith earnin# my successes (y

hard study and clear thinkin#& 6 als! had "!und !ut that n!(!dy )as

immune "r!m the dan#er !" makin# sucker lays&7 . Ed)in 9e"e%re*Reminiscences !" a St!ck Oerat!r

0OM'ET6T6O: ME:TA9 SK699S

7'er"!rmance !utc!mes are m!re likely t! (e achie%ed )hen )hat is

d!ne ri!r t! and durin# a c!metiti!n has (een lanned* ractised* and

sh!)n t! (e success"ul& 6n c!ntests* an athlete sh!uld ne%er use ne)

ar!aches* techni2ues* !r strate#ies )ith!ut them $rst (ein# tested*re$ned* and trained& An athlete sh!uld c!mete )ith !nly )hat is kn!)n

and has (een ractised&7. S!urce Unkn!)n

0O:F6DE:0E

7Kn!) and (elie%e in y!ursel"* and )hat !thers think )!n1t distur( y!u&7.

William Feather

7'!siti!n y!ursel" s! that y!u can1t (e kn!cked !ut !" a market (y a "e)

set(acks& 0!ntinu!us in%!l%ement reares y!u t! take ad%anta#e !" any

#!!d !!rtunity that arises& 6t als! c!ntri(utes t! y!ur sel".c!n$dence&

6t creates a sa"e en%ir!nment in )hich y!u can exeriment and learn*

kn!)in# that n! exerience )ill (e a career.endin# !ne&7 8& 'eter

Steidlmayer* Steidlmayer !n Markets

7Our deeest "ear is n!t that )e are inade2uate& Our deeest "ear is that

)e are !)er"ul (ey!nd measure& 6t is !ur li#ht* n!t !ur darkness* that

m!st "ri#htens us& We ask !ursel%es* 7Wh! am 6 t! (e (rilliant* #!r#e!us*

talented* and "a(ul!usC1 Actually* )h! are y!u n!t t! (eC @!u are a child!" =!d& @!ur layin# small d!esn1t ser%e the )!rld& There is n!thin#

enli#htened a(!ut shrinkin# s! that !ther e!le )!n1t "eel insecure& We

)ere (!rn t! make mani"est the #l!ry !" =!d that is )ithin us& 6t1s n!t

3ust in s!me !" usB it1s in e%ery!ne& And )hen )e let !ur !)n li#ht shine*

)e unc!nsci!usly #i%e !ther e!le ermissi!n t! d! the same& As )e

are li(erated "r!m !ur !)n "ear* !ur resence aut!matically li(erates

!thers&7 . :els!n Mandela* GLL 6nau#ural Seech* a 2u!te "r!m

Marianne Williams!n



7&&& @!u ha%e t! $nd indi%iduals )h! ha%e a curi!us (lend !" e#!& @!u

clearly need t! ha%e e!le )h! ha%e %ery hi#h sel".c!n$dence* )h!

ha%e a %ery hi#h e#!& 6n s!me cases* y!u1ll $nd indi%iduals )h! mani"est

that as a kind !" arr!#ance )hich can ru( e!le the )r!n# )ay at times&

S!metimes that arr!#ance can (e %ery im!rtant (ecause* a"ter all* y!uare #!in# t! (e a l!ser m!re !"ten than y!u1re ri#ht & & & And i" y!u ha%e

t! ha%e that arr!#ance !r c!ura#e* then that1s alri#ht& ,!)e%er* it is n!t

c!ura#e!us t! say* 16 am #!in# t! make this !ne (i# (et e%en th!u#h

e%ery!ne else says 6 am )r!n#&1 That is the h!me.run scenari! and that

is n!t )hat )e are talkin# a(!ut& We are talkin# a(!ut the c!ura#e and

sel".c!n$dence and e#! n!t 3ust t! #! a#ainst the cr!)d (ut t! (e )r!n#*

a l!t&7. Alesh -& 'atel* The Mind !" a Trader

7-!th indi%idual and r!"essi!nal in%est!rs can (e !%erc!n$dent a(!ut

their a(ilities* kn!)led#e* and "uture r!sects& O%erc!n$dence leads t!

excessi%e tradin# that can l!)er !rt"!li! returns& O%erc!n$dence als!

leads t! #reater risk takin#& @!u may (e accetin# m!re risk due t! under

di%ersi$cati!n and a "!cus !n in%estin# in small c!manies )ith hi#her

(etas& Finally* in%est!rs1 e%er increasin# use !" !nline (r!kera#e

acc!unts is makin# them m!re !%erc!n$dent than e%er (e"!re&7 . 8!hn R&

:!"sin#er* 6n%estment Madness

7What in%est!r d!esn1t (elie%e that there are #reat* success"ul

tradersin%est!rs !ut thereC They ha%e the secret* the !)er* thein"!rmati!n* all!)in# them t! secure )hat is ri#htly !urs& 6t1s n!t the

m!ney )e en%y as much as the in%estment )i/ard1s mysteri!us skill at

makin# it& 6t1s that "antasised skill that the en%i!us in%est!r "eels the

desire t! !ssess&

7&&&@!u "eel de$cient& En%y d!es that t! y!u& Unc!nsci!usly* y!u1re

thinkin# 1What ha%e 6 d!ne that makes me a l!ser in this )ayC Am 6

(ein# unished "!r s!methin# 6 did )r!n#C Was 6 (ein# #reedyC1

7S! y!u assume y!u need hel& @!u need a #!!d (r!ker * a ma#ical

trader* a (etter system& S!methin# t! make u "!r )hat y!u1re missin#&76t all (!ils d!)n t! (ad in%estment 3ud#ement& En%i!us in%est!rs

(ec!me timid& They han# (ack and )ait "!r directi!n& They hesitate

(e"!re (uyin# !r sellin#* and as any in%est!r kn!)s* 1,e )h! hesitates is

l!st&1 6n res!nse t! the l!sses caused (y hesitati!n* en%i!us in%est!rs

!ccasi!nally s)itch #ears* (ec!min# %ictims !" imulsi%e* !!rly lanned

#am(les&7 . The 'sych!l!#y !" Smart 6n%estin#* (y 6ra Estein P Da%id

=ar$eld* MD

7&&&it seems clear that e!le are caa(le !" thinkin#* at least at s!me

intuiti%e le%el* 16" 6 (uy a st!ck* then it )ill #! u a"ter)ards1 !r 16" 6 (uy a

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st!ck* then !thers )ill r!(a(ly )ant t! (uy the st!ck* t!!* (ecause they

are like me&1 Or 16 ha%e a h!t hand latelyB my luck is )ith me&1 Such

thinkin# is likely* in a su(tle )ay* t! c!ntri(ute t! the !%erc!n$dence

that may hel the r!a#ati!n !" seculati%e (u((les&7 . 6rrati!nal

Exu(erance* (y R!(ert 8& Shiller7,!) d! y!u (eat the a%era#esC -y takin# the risk !" y!ur !)n

erceti!ns& -y (ettin# that y!u are smart en!u#h* cle%er en!u#h*

exerienced en!u#h* t! ercei%e )hich "e) #r!us )ill d! (etter than

the rest& Rather than tryin# t! cushi!n y!ur !rt"!li! )ith the market

e2ui%alent !" )!rkin# "!r a ensi!n instead !" a artnershi* y!u try t!

l!ad u !n )hat l!!ks like a )inner !r t)! !r three&7 . 8ustin Mamis* The

:ature !" Risk

7M!st e!le hate t! (e )r!n#& :! !ne 6 e%er kne) relished sayin#* 1@!u

kn!)* 61m dead )r!n# in this&1 E#! is the killer hereB e#! in the

sych!l!#ical sense* rather than in the hil!s!hical meanin#* is the

!!site !" sel".esteem& E#! >!r "alse ride? says >su(c!nsci!usly? 16 can

ne%er (e )r!n#* !r make a mistake* (ecause 6 am #reat& 6" 6 d! make an

err!r in 3ud#ement* 6 )ill n!t (e resected&1 -ut human (ein#s are n!t

#!ds* and traders are n!t !mniscientB they must (e )r!n# s!metimes& T!

(e un)illin# t! accet this )!uld (e ill!#ical& T! (e a day trader y!u need

sel".esteem* the healthy sense that y!u are c!metent and )!rthy& 6" y!u

d!n1t "eel c!n$dent )ith y!ur !)n 3ud#ement* y!u can1t execute y!urtrades r!erly& 6n !rder t! trade* y!u must (e a(le t! take l!sses*

th!usands !" them* and yet c!me (ack and trade a#ain )ith c!n$dence&

8ust remem(er D!n1t let e#! >"alse ride? take the lace !" sel".esteem&7

. 5ict!r Serande!* 'rinciles !" 'r!"essi!nal Seculati!n

7@!ur ast exeriences can lead t! seci$c (eha%i!urs that harm y!ur

)ealth& F!r examle* y!u are r!ne t! attri(ute ast in%estment success

t! y!ur skill at in%estin#& This leads t! the sych!l!#ical (ias !"

!%erc!n$dence& O%erc!n$dence causes y!u t! trade t!! much and t!

take t!! much risk& As a c!nse2uence* y!u ay t!! much inc!mmissi!ns* ay t!! much in taxes* and are susceti(le t! (i# l!sses&7 .

8!hn R& :!"sin#er* 6n%estment Madness

76n y!ur market analysis* d! n!t #et s! cere(ral that y!u are ine4ecti%e&

6t d!esn1t matter i" the c!muter says s!* reality is the last sale& Traders

and in%est!rs ha%e a tendency t! !%eranalyse& One !" the sta#es e%ery

trader >and many in%est!rs? #!es thr!u#h is !%er reliance !n mechanical

and c!muterised tradin# systems& These are %ery use"ul t!!ls* (ut they

are n!t ans)ers& Many times 6 ha%e seen the technical indicat!rs say*

1sell*1 yet the market 3ust re"uses t! c!.!erate& 6t kees tradin# u& The



!nly truth is the last sale& Fi#ht the tae and y!u )ill c!llase&7 . Dean

9undell* Sun T/u1s Art !" War "!r Traders and 6n%est!rs

76n all !ther $elds !" acti%ity )e need t! c!n%ince e!le ar!und us that

!ur !ini!n is c!rrect& 6n the st!ck market* it 3ust d!esn1t )!rk this )ay&

6t1s suicide t! try t! trade )ith this ar!ach& 6nstead !" insistin# that y!uare ri#ht* y!u ha%e t! l!se y!ur e#! and any !ini!n y!u ha%e !" the

market& 8ust (e in tune )ith )hat1s haenin# in the m!ment&

76" a st!ck #!es a#ainst y!u* then y!u ha%e t)! ch!ices& The $rst ch!ice

is that y!u are ri#ht and the market and its sellers are )r!n#& @!u think

y!u kn!) (etter* s! y!u )ill h!ld the st!ck and try t! #et y!ur )ay

e%entually& The sec!nd ch!ice is that the market is ne%er )r!n#& 6" the

market #!es a#ainst my !siti!n* then 6 am )r!n# and 6 ha%e t! #et !ut&

The $rst ch!ice is the r!ad t! the #ra%e in the st!ck market& The sec!nd

ch!ice is the ch!ice !" )inners& 6t1s n!t easy t! re#ulate y!ur mind.set t!

think in this )ay&7 . 5adym =rai"er

,!) d! y!u kee y!ur c!n$denceC 6" y!u trade a l!t* y!u see markets

c!me (ack and y!u see that y!u1re ri#ht& @!u de%el! c!n$dence "r!m

that& What ama/es me is h!) many times 6 )atch my tradin# acc!unt #!

d!)n and then c!me ri#ht (ack& 6n site !" mysel"* 61ll (e makin# m!ney&

6n site !" mysel"& That1s the thin# that dra)s c!n$dence t! me y!u can

l!se it* (ut y!u can sure make it (ack real "ast* t!!& That1s a nice thin#&

Once y!u reali/e y!u are a(le t! d! that* it1s a real c!n$dence.(uilder& That1s )hen y!u d!n1t "eel it as that much !" a l!ss* )hen y!u are d!)n

)hate%er am!unt !" m!ney* (ecause y!u think* 7That is an illusi!nary

num(er& That num(er d!esn1t exist& E%en th!u#h there is less in y!ur

acc!unt than y!u had yesterday* it )ill (e m!re s!me day in the "uture&7

. S!urce Unkn!)n

70!n$dence* in sh!rt* means kn!)in# y!u1re #!in# t! )in& 6t isn1t a ma#ic

2uality )hich !nce !ssessed can ne%er (e l!st& T! (e sure* re#ular

)inners )ill ha%e an inner c!n%icti!n that they must )in !%er time* i"

they lay t! the rules& This is artly an inherent state !" mind and artlythe result !" l!n# exerience !" seein# the rules )!rkin#& -ut n! !ne (ut

a "!!l is c!n%inced they can )in 3ust (y layin#& @!u )in (y d!in# y!ur

h!me)!rk (etter* "!ll!)in# the rules m!re cl!sely* and actin# m!re

c!nsistently then the !ther layers& Winnin# #i%es y!u c!n$dence and

c!n$dence hels y!u )in & & & The cl!ser y!u #et t! !nly tradin# )hen

y!u1re c!n$dent y!u1ll )in* the hi#her y!ur )in rate and y!ur c!n$dence

)ill (e&7 . 8!hn 'erci%al* The Way !" the D!llar

7&&&may(e a (etter 2uesti!n a(!ut c!n$dence . $nancial and !ther)ise .

is n!t )hy e!le are !%erc!n$dent t! (e#in )ith* (ut )hy they stay



!%erc!n$dent& @!u see* the r!(lem )ith !%erc!n$dence is n!t the

innate (ias t!)ard !timism that m!st e!le seem t! !ssess& That1s a

#!!d thin#* it kees the )!rld m!%in# "!r)ard& The r!(lem is the

ina(ility t! temer !timism as a result !" ri!r exerience& Frankly* )e

d!n1t learn )ell en!u#h "r!m !ur mistakes& 0!nsider 6" !%erc!n$dence isas (i# a r!(lem as )e say it is* it sh!uld (e a sh!rt.term r!(lem at

)!rst& The learnin# r!cess )!uld ideally #! s!methin# like this We

think hi#hly !" !ursel%es* the )!rld and e%ents sh!) us )h! is the (!ss*

and )e (ec!me less c!n$dent and m!re realistic a(!ut !ur kn!)led#e

and skills& @et in the main* this d!es n!t haen&7 . -elsky P =il!%ich*

Why Smart 'e!le Make -i# M!ney Mistakes

76 ha%e had a l!t !" c!n%ersati!ns )ith !ne %ery* %ery success"ul trader in

!ne !" the chat r!!ms& One !" the thin#s that he t!ld me )as that tradin#

)as %ery (!rin# "!r him& When 6 had this c!n%ersati!n )ith him a(!ut a

year a#!* 6 c!uldn1t icture (ein# (!red& -ut !%er the last three !r "!ur

m!nths 61%e actually #!tten t! the !int )here tradin# has (ec!me %ery

(!rin#& >lau#hin#? @!u kn!)* it1s alm!st like r!ducti!n "act!ry )!rk& @!u

sh!) u at y!ur stati!n* thin#s c!me (y* y!u ut them t!#ether* y!u

c!llect y!ur check* and y!u #! h!me& What1s ket my interest is the

interacti!n )ith the !ther traders& 6 re#ularly c!mmunicate )ith a(!ut

ten !ther traders and )e send m!st !" the time durin# the day

discussin# %ari!us market issues& Als!* )hat hel 6 can (e t! !there!le kees me interested* as )ell& -ut the tradin# itsel" has #!tten

%ery r!utine (ecause 6 kn!) the system and it has )!rked %ery )ell& 6" it

)ere n!t "!r the interacti!ns and the chat r!!ms* it )!uld (e a %ery

l!nely r!"essi!n& 6 can1t ima#ine any(!dy d!in# this )ith!ut (ein#

in%!l%ed in !ne !" the %ari!us r!!ms* (ecause y!u1re essentially sittin# at

h!me al!ne all day& 6 like t! kee acti%e& 6 d! c!nsultin# !ne day a )eek

"!r a c!muter c!many& And last m!nth 6 (!u#ht a small c!many& As

y!u can see* 6 #et (!red 2uickly&7 . Al(ert Ma//!ne

7The !nly thin# 6 can rec!mmend t! asirin# traders is simly thisUnderstand that there is n! ma#ic ill* !ther than hard )!rk and

erse%erance& As much !" a clich as it may s!und* it1s simly the truth&

One !" the m!st im!rtant thin#s in tradin# the markets is $ndin# that

critical (alance (et)een a #!!d le%el !" c!n$dence in y!ur tradin# and a

real sense !" eretual humility&7 . Marderand Duee* The -est

0!n%ersati!ns )ith T! Traders

7'e!le ha%e the tendency t! (elie%e that the accuracy !" their "!recasts

increases )ith m!re in"!rmati!n& This is the illusi!n !" kn!)led#e . that

m!re in"!rmati!n increases y!ur kn!)led#e a(!ut s!methin# and



imr!%es y!ur decisi!ns& ,!)e%er* this is n!t al)ays the case . increased

le%els !" in"!rmati!n d! n!t necessarily lead t! #reater kn!)led#e& There

are three reas!ns "!r this& First* s!me in"!rmati!n d!es n!t hel us make

redicti!ns and can e%en mislead us& Sec!nd* many e!le may n!t ha%e

the trainin#* exerience* !r skills t! interret the in"!rmati!n& And*$nally* e!le tend t! interret ne) in"!rmati!n as c!n$rmati!n !" their

ri!r (elie"s&7 . 6n%estment Madness* (y 8!hn R& :!"sin#er

7&&&may(e a (etter 2uesti!n a(!ut c!n$dence . $nancial and !ther)ise .

is n!t )hy e!le are !%erc!n$dent t! (e#in )ith* (ut )hy they stay

!%erc!n$dent& @!u see* the r!(lem )ith !%erc!n$dence is n!t the

innate (ias t!)ard !timism that m!st e!le seem t! !ssess& That1s a

#!!d thin#* it kees the )!rld m!%in# "!r)ard& The r!(lem is the

ina(ility t! temer !timism as a result !" ri!r exerience& Frankly* )e

d!n1t learn )ell en!u#h "r!m !ur mistakes& 0!nsider 6" !%erc!n$dence is

as (i# a r!(lem as )e say it is* it sh!uld (e a sh!rt.term r!(lem at

)!rst& The learnin# r!cess )!uld ideally #! s!methin# like this We

think hi#hly !" !ursel%es* the )!rld and e%ents sh!) us )h! is the (!ss*

and )e (ec!me less c!n$dent and m!re realistic a(!ut !ur kn!)led#e

and skills& @et in the main* this d!es n!t haen&7 . Why Smart 'e!le

Make -i# M!ney Mistakes* (y -elsky P =il!%ich

7What in%est!r d!esn1t (elie%e that there are #reat* success"ul

tradersin%est!rs !ut thereC They ha%e the secret* the !)er* thein"!rmati!n* all!)in# them t! secure )hat is ri#htly !urs& 6t1s n!t the

m!ney )e en%y as much as the in%estment )i/ard1s mysteri!us skill at

makin# it& 6t1s that "antasi/ed skill that the en%i!us in%est!r "eels the

desire t! !ssess&

7&&&@!u "eel de$cient& En%y d!es that t! y!u& Unc!nsci!usly* y!u1re

thinkin# 1What ha%e 6 d!ne that makes me a l!ser in this )ayC Am 6

(ein# unished "!r s!methin# 6 did )r!n#C Was 6 (ein# #reedyC1

7S! y!u assume y!u need hel& @!u need a #!!d (r!ker* a ma#ical

trader* a (etter system& S!methin# t! make u "!r )hat y!u1re missin#&76t all (!ils d!)n t! (ad in%estment 3ud#ment& En%i!us in%est!rs (ec!me

timid& They han# (ack and )ait "!r directi!n& They hesitate (e"!re (uyin#

!r sellin#* and as any in%est!r kn!)s* 1,e )h! hesitates is l!st&1 6n

res!nse t! the l!sses caused (y hesitati!n* en%i!us in%est!rs

!ccasi!nally s)itch #ears* (ec!min# %ictims !" imulsi%e* !!rly lanned

#am(les&7 . The 'sych!l!#y !" Smart 6n%estin#* (y 6ra Estein P Da%id

=ar$eld* MD

7On Wall Street* )ise men* as )ell as "!!ls* can (e easily dra)n int!

(!!(y tras& 6n "act* in my exerience a ers!n1s years and 2uality !"



educati!n ha%e %ery little t! d! )ith makin# (i# m!ney in%estin# in the

market&

7The m!re intelli#ent e!le are* the m!re they tend t! think they kn!)

)hat they are d!in# . and the m!re they )ill ha%e t! learn the hard )ay

h!) little they really kn!) a(!ut !utsmartin# the st!ck market& The "e)e!le 6 ha%e kn!)n !%er the years )h! ha%e (een un2uesti!na(ly

success"ul makin# m!ney in st!cks )ere decisi%e* decisi!n.makin#

indi%iduals )ith!ut hu#e e#!s&

7The market has a simle )ay !" )hittlin# all excessi%e ride and

!%er(l!)n e#!s d!)n t! si/e& A"ter all* the )h!le idea is t! (e c!mletely

!(3ecti%e and rec!#ni/e )hat the marketlace is tellin# y!u* rather than

try t! r!%e that the thin# y!u said !r did yesterday !r six )eeks a#!

)as ri#ht& The "astest )ay t! take a (ath in the st!ck market !r #! (r!ke

is t! try t! r!%e that y!u are ri#ht and the market is )r!n#&7 . ,!) T!

Make M!ney in St!cks* (y William 8& O1:eil

0RED6T

7M!dern man dri%es a m!rt#a#ed car !%er a (!nd.$nanced hi#h)ay !n

credit.card #as&7 . Earl Wils!n

0ROWD -E,A56OUR

7There are th!se )h! lack "aith in the )isd!m !" cr!)ds& -ut the market

d!es n!t "!ll!) l!#icB it "!ll!)s s!me mysteri!us tides !" mass

sych!l!#y& Thus earnin#s r!3ecti!ns #et marked u and d!)n as the

rices #! u and d!)n* 3ust (ecause Wall Streeters hate the insecurity !"

anarchy& 6" the st!ck is #!in# d!)n* the earnin#s must (e "allin# aart& 6"

it is #!in# u* the earnin#s must (e (etter than )e th!u#ht& S!me(!dy

must kn!) s!methin# )e d!n1t&7 . Adam Smith* The M!ney =ame7@!u ne%er "eel #!!d a(!ut (uyin# a #reat (ar#ain& When y!u (uy a

#reat (ar#ain* y!u1re d!in# it )ith s)eaty alms* y!u1re leanin# a#ainst

the cr!)d* en#a#in# in c!ntrary thinkin#* and y!u1re retty much al!ne&7

. Arn!ld 5an Den -er#* Outstandin# 6n%est!rs Di#est

7Fi#ht the cr!)d& 6t is )arm and "u//y in the middle !" cr!)ds& @!u d! n!t

need t! (e )arm and "u//y )ith in%estin#&7 . Seth Klarma* Mar#in !"

Sa"ety

7My 3!( )as (ein# aid (y )ealthy "amilies t! hel them ch!!se st!cks

and (!nds& My results )ere much (etter )hen 6 )as )!rkin# "r!m here



than "r!m Manhattan* Radi! 0ity and R!cke"eller 0entre& 6 had #!!d

results in :e) @!rk& When 6 came here* 6 had (etter results& The secret ;

is that t! (uy st!cks at a (ar#ain rice y!u ha%e t! d! the !!site !" the

cr!)d& When y!u1re #!in# t! the same meetin#s )ith the !ther e!le in

Manhattan* it1s hard t! (e di4erent&7 N Sir 8!hn Temlet!n7The cr!)d tends t! "!ll!) the )r!n# si#ns near the market t!s and

(!tt!ms& At the #reatest deths !" a (ear market* the ec!n!my is

#enerally in recessi!n and (usiness r!$ts are tum(lin#& 6n%est!rs are

unch drunk "r!m su4erin# hu#e l!sses "!r a year !r t)! !" "allin# rices&

-ad ne)s d!minates the headlines& M!st e!le !nly see the d!)ntrend

c!ntinuin#& This is the #l!!m and d!!m that (ear markets (!tt!m and

(ull markets (e#in& Watch "!r l!!senin# credit and interest rate

decreases&7 . Marty )ei#

7There are "ar m!re 7in%estment r!"essi!nals7 and )ay m!re 6Q in the

$eld* as it didn1t use t! l!!k that r!misin#& 6n%estment data are

a%aila(le m!re c!n%eniently and "aster t!day& -ut the (eha%i!ur !"

in%est!rs )ill n!t (e m!re intelli#ent than in the ast* desite all this&

,!) e!le react )ill n!t chan#eB their sych!l!#ical makeu stays

c!nstant& @!u need t! di%!rce y!ur mind "r!m the cr!)d& The herd

mentality causes all these 6Qs t! (ec!me aralysed& 6 d!n1t think

in%est!rs are n!) actin# m!re intelli#ently* desite the intelli#ence&

Smart d!esn1t al)ays e2ual rati!nal& T! (e a success"ul in%est!r y!umust di%!rce y!ursel" "r!m the "ears and #reed !" the e!le ar!und y!u*

alth!u#h it is alm!st im!ssi(le&7 . Warren -u4ett

7:!r )ill 6 (uy market."a%!ured st!cks& 6 articularly n!tice it )hen 6

attend meetin#s "!r techn!l!#y st!cks and see all the e!le cr!)din#

int! the r!!m and s! !n& 6" there1s standin# r!!m !nly* that1s usually a

retty "air si#n it1s n!t a #!!d time t! (uy the st!ck&7 . 'hilli Fisher

0UTT6:= 9OSSES6 d!n1t ha%e a r!(lem lettin# my r!$ts run* )hich many traders d!& @!u

ha%e t! (e a(le t! let y!ur r!$ts run& 6 d!n1t think y!u can c!nsistently

(e a )inner tradin# i" y!u1re (ankin# !n (ein# ri#ht m!re than !"

the time& @!u ha%e t! $#ure !ut h!) t! make m!ney (y (ein# ri#ht !nly

<.J !" the time&7 . -ill 9ischut/

7-uyin# !n retracement is sych!l!#ically seducti%e (ecause y!u "eel

y!u1re #ettin# a (ar#ain %ersus the rice y!u sa) a )hile a#!& ,!)e%er* 6

"eel that ar!ach c!ntains m!re than a dr! !" !is!n& Watch idly )hile



r!$t. takin# !!rtunities arise* (ut in ad%ersity run like a 3ackra((it&7 .

William Eckhardt

7The (est ad%ice 6 can #i%e t! the !rdinary #uy tryin# t! (ec!me a (etter

trader is learn t! take l!sses& The m!st im!rtant thin# in makin# m!ney

is n!t lettin# y!ur l!sses #et !ut !" hand&7 . Marty Sch)art/76 send my day tryin# t! make mysel" as hay and relaxed as 6 can (e&

6" 6 ha%e !siti!ns #!in# a#ainst me* 6 #et ri#ht !utB i" they are #!in# "!r

me* 6 kee them&7 . 'aul Tud!r 8!nes

7@!ur )!rst.case exit* )hich is desi#ned t! reser%e y!ur caital* sh!uld

(e determined ahead !" time& 6n additi!n* y!u sh!uld als! ha%e s!me

idea a(!ut h!) y!u lan t! take r!$ts and a strate#y "!r lettin# y!ur

r!$ts run&7 . 5an Thar

7The (est ad%ice 6 can #i%e t! the !rdinary #uy tryin# t! (ec!me a (etter

trader is* 19earn t! take l!sses&1 The m!st im!rtant thin# in makin#

m!ney is n!t lettin# y!ur l!sses #et !ut !" hand&7 . T!m -ald)in

7My ercenta#e !" )inners is !nly a(!ut * (ecause 6 cut my l!sers

%ery 2uickly& The maximum l!ss 6 all!) is I* and usually 6 am !ut !" a

l!sin# st!ck a l!t 2uicker& 6 make my m!ney !n the "e) st!cks a year that

d!u(le and trile in rice& The r!$ts in th!se trades easily makes u "!r

all the small l!sers&7 . Da%id Ryan

7My hil!s!hy is that all st!cks are (ad& There are n! #!!d st!cks

unless they #! u in rice& 6" they #! d!)n instead* y!u ha%e t! cut y!url!sses "ast&7 . William O1:eil

7The tradin# rules 6 li%e (y are G 0ut l!sses& < Ride )inners& J Kee (ets

small& F!ll!) the rules )ith!ut 2uesti!n& Kn!) )hen t! (reak the

rules&7 . Ed Seyk!ta

7The m!st im!rtant thin# is t! ha%e a meth!d "!r stayin# )ith y!ur

)inners and #ettin# rid !" y!ur l!sers& 6" a trade d!esn1t l!!k ri#ht* 6 #et

!ut and take a small l!ss&7 . =ary -iel"eldt

7,e must "ear that his l!ss may de%el! int! a much (i##er l!ss* and

h!e that his r!$t may (ec!me a (i##er r!$t&7 . Ed)in 9e"e%re and 8esse 9i%erm!re

76 am n! (etter than the next trader* 3ust 2uicker at realisin# my l!sses

and m!%in# !n t! the next trade&7 . =e!r#e S!r!s

7@ea ri#ht* it1s 3ust #!t t! (!tt!m !ut s! let1s a%era#e d!)n& Wh! )as it

that )as )!rth a(!ut a (illi!n d!llars that said he )asn1t )ealthy en!u#h

t! a%era#e d!)nC7 . 8!e Di:a!li

DA:=ER . :ATURE AT WORK



The %ery same #e!hysical "eatures that make the Earth s! li"e.#i%in#

and reser%in# als! make it dan#er!us& F!r examle* the sectacular

%!lcan!es that in the early hist!ry !" !ur lanet heled t! #enerate the

atm!shere and the !ceans ha%e in the last three centuries )ied !ut a

2uarter !" a milli!n e!le and in3ured c!untless !thers& At the sametime* the rains that "eed !ur ri%ers and r!%ide us )ith the !ta(le )ater

that )e need t! sur%i%e ha%e de%astated hu#e tracts !" the lanet )ith

f!!ds that in recent years ha%e (een truly (i(lical in scale& . S!urce

Unkn!)n

DEA96:= W6T, 9OSSES

76deal day traders are deely intr!secti%e* and kn!) )h! they are asdeely as !ssi(le& T! (e a success"ul day trader means t! (e real and

h!nest )ith y!ursel" at all times& With!ut the a(ility t! (e h!nest )ith

y!ursel"* "!r#et this 0hater y!u cann!t day trade& @!u must (e at a

sta#e )here y!u d! n!t try t! lie t! y!ursel"& The simle "act is* y!u )ill

l!se s!metimes& @!u d!n1t ha%e t! rati!nalise it a)ayB y!u d!n1t ha%e t!

hide (ehind tyical de"ence mechanisms& 8ust stand u and say 161m

)r!n#&1 This admissi!n d!es n!t mean that y!u are stuid !r

inc!metent& -ein# )r!n# is art !" this (usiness* and a art !" li"e& 6n

day tradin#* y!u are y!ur !nly enemyB y!u are y!ur !)n (!ss* and y!udetermine y!ur !)n destiny&7 . 5ict!r Serande!* 'rinciles !"

'r!"essi!nal Seculati!n

7A"ter takin# a st!ck l!ss* in%est!rs "eel h<er re#ret i" the l!ss can (e tied

t! their !)n decisi!n& ,!)e%er* i" the in%est!r can attri(ute the l!ss t!

thin#s !utside !" his !r her c!ntr!l* then the "eelin# !" re#ret is )eaker&

F!r examle* i" the st!ck y!u h!ld declines in rice )hen the st!ck

market itsel" is ad%ancin#* then y!u ha%e made a (ad ch!ice and re#ret

is h<& 6n this case* y!u )!uld a%!id sellin# the st!ck (ecause y!u )ant t!

a%!id the h< re#ret "eelin#s& Alternati%ely* i" the st!ck y!u h!ld dr!s in

rice durin# a #eneral market decline* then this is di%ine inter%enti!n

and !ut !" y!ur c!ntr!l& The "eelin# !" re#ret is )eak and y!u may (e

m!re inclined t! sell&7 . 6n%estment Madness* (y 8!hn R& :!"sin#er

7@!u need t! (e a(le t! read y!ur mental and hysical stress cues and

interret them c!rrectly& :!tice i" y!ur ar!usal le%el is t!! hi#h& @!u can

then inter%ene early* (e"!re the stress (ec!mes t!! unmana#ea(le& @!u

can learn t! take dee (reaths* d! s!me !siti%e sel".statements* and

relax en!u#h t! r!(lem s!l%e and re.ad3ust ar!riately t! thesituati!n&7 . @!ur 'er"!rmin# Ed#e* (y 8!ann Dahlk!etter* 'h&D&



7As !ne trader said* 1learn t! l!%e y!ur small l!sses&1 6" y!u can learn t!

l!%e y!ur small l!sses* y!u are that much cl!ser t! a (i# )innin# trade&

Kee y!ur l!sses small* (ut i" y!u learn t! l!%e y!ur small l!sses y!u can

say* 1E%en th!u#h 6 had a l!ss it )as a #!!d trade* (ecause it )as a small

l!ss and a )ell.lanned and executed trade&1 S!metimes* the (est tradesare n!t the )innin# !nes that ut m!ney in y!ur !cketB s!metimes they

are the !nes that #et y!u !ut !" the market at the ri#ht time&7. The Mind

!" a Trader* (y Alesh -& 'atel

7Durin# !n#!in# acti%ities* such as day tradin#* y!u must learn h!) t!

ace y!ursel"& This means alternatin# (et)een eri!ds !" intense acti%ity

and eri!ds !" markedly decreased acti%ity* re2uirin# little !" y!ur

attenti!n san& These 1auses1 sh!uld !ccur )hen y!u d! n!t ha%e t!

res!nd 2uickly t! a current market fux& This is hard ad%ice t! "!ll!) "!r

certain tyes !" in%est!rs . aran!id* !(sessi%e* and !thers& They re"use

t! all!) themsel%es a (reak* s!metimes !n the the!ry that i" they st!*

they1ll #i%e s!me!ne else an !!rtunity t! #ain !n them& -ut y!u can1t

#! all !ut e%ery minute !" e%ery day& E%en the #reatest r!"essi!nal

athletes ace themsel%es durin# #ames !r races* #atherin# their

stren#ths "!r )hen they1ll m!st need it& @!u* t!!* sh!uld $nd a ace that

suits y!u&7 . The 'sych!l!#y !" Smart 6n%estin#* (y 6ra Estein P Da%id

=ar$eld* MD

7@!u can #et ahead !" y!ursel" in this #ame* and it1s dan#er!us t! #etc!cky& -ut 61%e had times )here "!r an h!ur 6 c!uld d! n! )r!n#& 61m

tradin# a st!ck and LL ercent !" the trades are #!!d* they1re all "!r

J !r shares* and 61ll make G #rand& Then 61ll !%erextend mysel"

and may(e (uy G* !r G* shares* $#htin# the trend 3ust (ecause

6 kn!) the st!ck has hit a su!rt le%el& Then it (l!)s thr!u#h that

su!rt and 6 can1t #et !ut )ith!ut l!sin# hal" a !int !r a (uck& That

m!%e c!uld und! hal" !" )hat it t!!k me an h!ur t! make& When that

haens* y!u1%e 3ust #!t t! sit (ack* take a dee (reath* #et a #lass !"

)ater* and #et (ack in&7 . S!urce Unkn!)n7M!ney d!es n!t #i%e a trader m!re c!m"!rt* (ecause* rich !r !!r* he

can make mistakes and it is ne%er c!m"!rta(le t! (e )r!n#& And )hen a

milli!naire is ri#ht his m!ney is merely !ne !" his se%eral ser%ants&

9!sin# m!ney is the least !" my tr!u(les& A l!ss ne%er (!thers me a"ter 6

take it& 6 "!r#et it !%erni#ht& -ut (ein# )r!n# . n!t takin# the l!ss . that is

)hat d!es the dama#e t! the !cket(!!k and t! the s!ul&7 .

Reminiscences !" a St!ck Oerat!r* (y Ed)in 9e"e%re

7Durin# !n#!in# acti%ities* such as day tradin#* y!u must learn h!) t!

ace y!ursel"& This means alternatin# (et)een eri!ds !" intense acti%ity



and eri!ds !" markedly decreased acti%ity* re2uirin# little !" y!ur

attenti!n san& These 1auses1 sh!uld !ccur )hen y!u d! n!t ha%e t!

res!nd 2uickly t! a current market fux& This is hard ad%ice t! "!ll!) "!r

certain tyes !" in%est!rs . aran!id* !(sessi%e* and !thers& They re"use

t! all!) themsel%es a (reak* s!metimes !n the the!ry that i" they st!*they1ll #i%e s!me!ne else an !!rtunity t! #ain !n them& -ut y!u can1t

#! all !ut e%ery minute !" e%ery day& E%en the #reatest r!"essi!nal

athletes ace themsel%es durin# #ames !r races* #atherin# their

stren#ths "!r )hen they1ll m!st need it& @!u* t!!* sh!uld $nd a ace that

suits y!u&7 . The 'sych!l!#y !" Smart 6n%estin#* (y 6ra Estein P Da%id

=ar$eld* MD

7A trader may ut t!! much ener#y int! tryin# t! r!tect a l!sin#

!siti!n* h!in# that it )ill turn ar!und* rather than sa%in# ener#y (y

#ettin# !ut !" the trade& The un)illin#ness t! "ace the truth and read3ust

t! the ne) re2uirements !" t!day1s market is a #!!d examle !" the

sych!l!#ical de"ences !" denial and rati!nali/ati!n that l!ck the l!sin#

trader int! reeatin# yesterday1s err!rs )ith yesterday1s strate#y&7 .

Tradin# t! Win* (y Ari Kie%* M&D&

7:!ne !" us likes t! admit t! himsel" that he has (een )r!n#& 6" )e ha%e

made a mistake in (uyin# a st!ck (ut can sell the st!ck at a small r!$t*

)e ha%e s!meh!) l!st any sense !" ha%in# (een "!!lish& On the !ther

hand* i" )e sell at a small l!ss )e are 2uite unhay a(!ut the )h!lematter& This reacti!n* )hile c!mletely natural and n!rmal* is r!(a(ly

!ne !" the m!st dan#er!us in )hich )e can indul#e !ursel%es in the

entire in%estment r!cess& M!re m!ney has r!(a(ly (een l!st (y

in%est!rs h!ldin# a st!ck they really did n!t )ant until they c!uld 1at

least c!me !ut e%en1 than "r!m any !ther sin#le reas!n & & & Furtherm!re*

this dislike !" takin# a l!ss* e%en a small l!ss* is 3ust as ill!#ical as it is

natural& 6" the real !(3ect !" c!mm!n st!ck in%estment is the makin# !" a

#ain !" a #reat many hundreds ercent !%er a eri!d !" years* the

di4erence (et)een* say* a < ercent l!ss !r a ercent r!$t (ec!mesa c!marati%ely insi#ni$cant matter&7. The 6n%est!r1s Anth!l!#y* (y

0harles D& Ellis

7As a trader startin# !ut* the thin# y!u need t! reali/e is that y!u1re

#!in# t! l!se& 'sych!l!#ically* human (ein#s are n!t set u t! l!se& 6" the

market m!%es a#ainst me* 6 take the l!ss and 6 m!%e !n& 6 really try t!

n!t let it (!ther me at all& @!u c!uld r!(a(ly c!mare it t! r!"essi!nal

s!rts& 6" y!u1re a r!"essi!nal (asket(all team* y!u1re n!t #!in# t! )in

e%ery #ame& The #!al is t! )in the m!st #ames y!u can& When y!u l!se

a #ame* y!u l!!k at it and see )hat y!u did )r!n# and m!%e !n& D!n1t



d)ell !n it& @!u d!n1t let it #et t! y!u t!! much !r y!u1re n!t #!in# t! )in

any m!re #ames&7 . Da%e Alexander

7Su!se y!u "ace a ch!ice (et)een >G? accetin# a sure l!ss !" I**

!r ><? takin# a chance )here there is a I ercent chance y!u )ill l!se

G* and a < ercent chance y!u )ill l!se n!thin#& The exectedl!ss in (!th ch!ices is I*& W!uld y!u ch!!se t! take the #uaranteed

l!ss !r take a chanceC M!st e!le !t "!r the latter& WhyC -ecause they

hate t! l!se And the uncertain ch!ice h!lds !ut the h!e they )!n1t

ha%e t! l!se&7 . -ey!nd =reed and Fear* (y ,ersh She"rin

7A trader may ut t!! much ener#y int! tryin# t! r!tect a l!sin#

!siti!n* h!in# that it )ill turn ar!und* rather than sa%in# ener#y (y

#ettin# !ut !" the trade& The un)illin#ness t! "ace the truth and read3ust

t! the ne) re2uirements !" t!day1s market is a #!!d examle !" the

sych!l!#ical de"ences !" denial and rati!nali/ati!n that l!ck the l!sin#

trader int! reeatin# yesterday1s err!rs )ith yesterday1s strate#y&7 .

Tradin# t! Win* (y Ari Kie%* M&D&

DEA96:= W6T, STRESS

79ike ain* stress sh!uld als! (e %ie)ed as a )arnin#& S! i" y!u are

extremely tense and anxi!us* y!u sh!uld try t! esta(lish )hat is causin#

these h!rri(le sensati!ns& 6t mi#ht (e y!ur 3!(* !r y!ur arents* !r y!urmarria#e* !r the unhay a4air y!u are ha%in#& Whate%er it is* the

chances are that y!ur stress"ul "eelin#s are tellin# y!u t! make chan#es&

6" y!u d!n1t try t! s!rt !ut the s!urce !" y!ur stress* then learnin# h!) t!

mana#e it )ill !nly d! hal" !" the 3!(&7 . S!urce Unkn!)n

DE06S6O: MAK6:=

7S!me e!le* h!)e%er l!n# their exerience !r h< their intellect* aretemeramentally incaa(le !" reachin# $rm decisi!ns&7 . 8ames

0alla#han

DER656:= 'ERSO:A9 =ROWT, FROM TRAD6:=

76n this "ast aced )!rld !" ec!n!mic achie%ement and endless ursuits*

it is !"ten !%erl!!ked that tradin# is 3ust a 3!(& As such* tradin# sh!uld

neither threaten sel".esteem n!r in%!ke h!stility& Tradin# sh!uld (e "un*challen#in# and "ul$llin#* as )ell as $nancially re)ardin# Un"!rtunately



many traders l!se si#ht !" this simle truth and turn a !tentially

re)ardin# acti%ity int! a #ame !" Russian R!ulette* threatenin#

destructi!n "r!m sel".im!sed ressure and "ear&7 . S!urce Unkn!)n

DEST6:@

7Destiny is n! matter !" chance& 6t is a matter !" ch!ice 6t is n!t a thin#

t! (e )aited "!rB it is a thin# t! (e achie%ed&7 . William 8ennin#s -ryan

DE5E9O'6:= A TRAD6:= '9A:

7There are hundreds !" technical analysis meth!ds and systems

>c!m(inati!ns !" meth!ds? !ut there currently& M!st !" these ha%e (een

th!u#ht !ut and de%el!ed "!r a reas!n& They* at least at s!me !int in

time* "!r certain markets* r!%ed t! (e e4ecti%e meth!d!l!#ies& @!u may

ha%e heard the idea that i" a meth!d is !ut !n the 6nternet !r in s!me

!ther easily accessi(le medium that it1s likely that it1s n!t as e4ecti%e

t!day as it claims t! (e !r as hist!rical er"!rmance dem!nstrates it t!

(e& Exerienced traders )ill tend t! a#ree )ith this idea& ,!)e%er* that

d!esn1t mean that these meth!ds !r systems aren1t #!in# t! (e hel"ul

t! y!u& @!ur study and understandin# !" them is #!in# t! (e a %ery

im!rtant art !" h!) y!u1ll de%el! y!ur r!rietary tradin# lan&7 .

S!urce Unkn!)n

D6S06'96:E

7We must all su4er !ne !" t)! thin#s the ain !" disciline !r the ain !"

re#ret !r disa!intment&7. E 8ames R!hn

7Disciline is the (rid#e (et)een #!als and acc!mlishment&7 . 8im R!hn

7Makin# m!ney has n!thin# t! d! )ith intelli#ence& Think !" all the (ri#ht

e!le that ch!!se careers !n Wall Street& 6" intelli#ence )ere the key*

there )!uld (e a l!t m!re e!le makin# m!ney tradin#&&&T! (e a

success"ul trader* y!u ha%e t! (e a(le t! admit mistakes& 'e!le )h! are

%ery (ri#ht d!n1t make %ery many mistakes& 6n a sense* they #enerally

are c!rrect& 6n tradin#* h!)e%er* they ers!n )h! can easily admit t!

(ein# )r!n# is the !ne )h! )alks a)ay a )inner&7 >5ict!r Serande!? .

The :e) Market Wi/ards* (y 8ack Sch)a#er

7T! summari/e* tradin# )ith c!n$dence is t! d! )ith ha%in# a meth!d)hich y!u ha%e r!%ed y!ursel"* and )hich y!u kn!) )ill )in !%er time i"



y!u "!ll!) it c!nsistently& That means (ein# a(le t! rec!#ni/e the

c!nditi!ns )hich all!) y!u t! trade* and !nly tradin# )hen they are all

resent& This is c!marati%ely easy )ith hindsi#ht )hen )e1re actually

there* )e can see )hen all the ieces $t& -ut (e"!rehand* )e d!n1t kn!)

that all the ieces are #!in# t! $t s! )e trade (ecause )e1re imatientand "ear that this may(e the (est )e1ll #et& Well* s!meh!) )e 3ust ha%e

t! #et t! (e atient& 9et1s "ace it* it calls "!r #reat disciline&7 The Way !"

the D!llar* (y 8!hn 'erci%al

7T!! !"ten thinkin# a(!ut m!ti%ati!n is ne#lected (y the n!%ice trader&

-ecause m!ti%ati!n stimulates and directs (eha%i!ur* it has !"ten (een

descri(ed as the incenti%e t! tra%el the r!ad t! !ur #!als& 6t is the 1)hy1

)hereas #!als are the 1)hat&1 9ackin# m!ti%ati!n is n!t as (ad as n!t

kn!)in# )e lack m!ti%ati!n& 6n the latter case* )e )ill already ha%e set

!4 unreared d!)n the r!ad t! ruin* (ecause sel".kn!)led#e )ill n!t

ha%e in"!rmed us that )e lack the necessities "!r reachin# !ur

destinati!n&7 . The Mind !" a Trader* (y Alesh -& 'atel

76 kn!) "!r a "act that my disciline in executin# each and e%ery trade

acc!rdin# t! my tradin# system is the secret t! my success&&&6" y!u )ant

t! imr!%e y!ur tradin#* )hat y!u need t! d! is %ery simle& -e"!re y!u

enter any trade* think that y!u )ill ha%e t! exlain this trade t! the )!rld

in a case study "!rmat& @!u ha%e t! exlain the reas!n "!r entry* y!ur risk

mana#ement #uidelines* and )hy y!u exited the trade& 6" y!u can trulyd! this* 6 h<ly (elie%e that y!u can en3!y the same tye !" success 6 ha%e

en3!yed in this challen#e&7 . The St!ck Trader* (y T!ny O/

7Rarely d! any !" us #r!) u learnin# h!) t! !erate in an arena that

all!)s "!r c!mlete "reed!m !" creati%e exressi!n* )ith n! external

structure t! restrict it in any )ay& 6n the tradin# en%ir!nment* y!u )ill

ha%e t! make u y!ur !)n rules and then ha%e the disciline t! a(ide (y

them& The r!(lem is* rice m!%ement is fuid* al)ays in m!ti!n* 2uite

unlike the hi#hly structured e%ents that m!st !" us are accust!med t!& 6n

the market en%ir!nment* the decisi!ns that c!n"r!nt y!u are as endlessas the rice m!%ements y!u intend t! take ad%anta#e !"& @!u d!n1t 3ust

ha%e t! decide t! articiate* y!u als! ha%e t! decide )hen t! enter*

h!) l!n# t! stay in* and under )hat c!nditi!ns t! #et !ut& There is n!

(e#innin#* middle* !r end . !nly )hat y!u create in y!ur !)n mind&7 .

Mark D!u#las* The Discilined Trader De%el!in# Winnin# Attitudes

7@!u )ill need a s!und ar!ach N !ne that all!)s y!u t! )in at tradin#&

6t1s (est t! try t! )in !n the #rind 'lan !n takin# a small r!$t "r!m a

small num(er !" trades& D!n1t think !" y!ursel" as a take.!4 artistB rather*





think !" y!ursel" as marketin# an idea )hene%er y!u enter a trade&7 .

Steidlmayer !n Markets* (y 8& 'eter Steidlmayer

7Deendin# !n the manner in )hich it is used* the market may (e a t!!l

!" either the in%est!r !r the #am(ler& 6" used in a redetermined* alied*

c!nsistent* and )ell.researched "ashi!n* the market )ill r!tect thein%est!r "r!m infati!n* hel m!ney #r!) at an a(!%e.a%era#e rate* and

r!%ide retirement security& 6t is neither the #!al n!r the a(ility !"

#am(lin# t! r!%ide these& M!ti%ati!n is at the heart !" this issue& The

in%est!r )h! all!)s l!n#.term !(3ecti%es t! (ec!me !(scured can easily

(ec!me a #am(ler&7 . The 6n%est!r1s Qu!tient* (y 8ake -ernstein

7Once y!u ha%e analysed the (i# icture and "!rmed and de%el!ed y!ur

lan* it is imerati%e that y!u ha%e the disciline t! stick t! it& 6t is a

c!mm!n mistake "!r traders t! dis!(ey their !)n rules& D!in# s!

ine%ita(ly )ill lead t! m!re lack !" disciline and a series !" l!sin#

trades&7 . Sun T/u1s Art !" War "!r Traders and 6n%est!rs (y Dean 9undell

76n%estment sych!l!#y is the m!st im!rtant asect !" a trader& 6n my

career as a trader* 6 (elie%e that success"ul in%estin# is a(!ut ei#hty.$%e

ercent sych!l!#ical disciline* a(!ut ten ercent skill* )hich y!u #ain

thr!u#h exerience and studies* and $%e ercent luck& And 6 (elie%e that

the luck )ill c!me i" y!u #et the !ther t)! %aria(les d!)n& 6n !ther

)!rds* i" y!u de%!te the sych!l!#y that y!u need t! ha%e t! (e

success"ul and y!u de%el! the skills thr!u#h y!ur studies and hard )!rkt! c!nstant c!mmitment and determinati!n* the luck )ill c!me t! y!u&7 .

S!urce Unkn!)n

7Traders )h! l!se "!ll!) !ne !" se%eral tyical atterns& S!me reeatedly

su4er indi%idual lar#e l!sses that )ie !ut earlier #ains !r #reatly

increase a small l!ss& Others exerience (rie" eri!ds durin# )hich their

tradin# )heels "all !4B they l!se disciline and c!ntr!l and make a series

!" (ad trades as a result&

7The )ise trader makes many small trades* remains in%!l%ed and

c!nstantly maintains and sharens his "eel "!r the market& F!r all !" his)!rk* he h!es t! recei%e s!me r!$t* e%en i" it is small in d!llar terms&

6n additi!n* c!ntinual articiati!n all!)s him t! sense and rec!#ni/e the

"e) real !!rtunities )hen they arise& These #enerate the lar#e re)ards

that make the e4!rt !" tradin# truly )!rth)hile&7 . Steidlmayer !n

Markets* (y 8& 'eter Steidlmayer

76" my head is n!t G ercent int! it* 61m n!t tradin# at eak

er"!rmance& 6t1s (etter 3ust t! #! h!me& F!cus and c!ncentrati!n are

critical& 61m success"ul )hen 61m c!ncentratin# and kn!) exactly )hat1s

#!in# !n& When 61m n!t d!in# )ell* !ne thin# that hels me !ut !" my rut



is 6 #et smaller and take !ne trade at a time& 6 try t! #et the endulum

(ack in my directi!n* l!!kin# t! make 3ust !ne )innin# trade& When y!u

#et "rustrated* y!u need t! take a ste (ack& May(e 61ll #! "!r a )alk 3ust

t! clear my head& 6 calm d!)n* re#r!u* and #et (ack int! the (attle& 6

trade smaller !siti!ns* and 6 take my r!$ts& Then 61m n!t l!sin# m!neyanym!re* 61m makin# it&7 . Electr!nic Day Traders1 Secrets* (y Fried"erti#

and West

76" it )as easy t! )in* there )!uld (e m!re chami!ns& The techni2ues

are simle& The eternal 2uesti!n is h!) t! (alance atience and

rudence %ersus #!in# "!r the h!me run & & &6n tradin#* ullin# the tri##er

!n )hen t! trade is 3ust as im!rtant as all the rearati!n and attenti!n

t! detail that )ent (e"!re& 6" a trade d!es n!t d! )ell at the start* the

trader must (e discilined and ha%e )hat.i" scenari!s in lace "!r

alternate c!urses !" acti!n& As l!n# as the circumstances "!r makin# the

trade are still in e4ect* the trader can stay )ith the !siti!n&7 . The

Educati!n !" a Seculat!r* (y 5ict!r :iederh!4er

7@!u )ill need a s!und ar!ach . !ne that all!)s y!u t! )in at tradin#&

6t1s (est t! try t! )in !n the #rind 'lan !n takin# a small r!$t "r!m a

small num(er !" trades& D!n1t think !" y!ursel" as a take.!4 artistB rather*

think !" y!ursel" as marketin# an idea )hene%er y!u enter a trade&7 .

Steidlmayer !n Markets* (y 8& 'eter Steidlmayer

7T!! !"ten thinkin# a(!ut m!ti%ati!n is ne#lected (y the n!%ice trader&-ecause m!ti%ati!n stimulates and directs (eha%i!ur* it has !"ten (een

descri(ed as the incenti%e t! tra%el the r!ad t! !ur #!als& 6t is the 1)hy1

)hereas #!als are the 1)hat&1 9ackin# m!ti%ati!n is n!t as (ad as n!t

kn!)in# )e lack m!ti%ati!n& 6n the latter case* )e )ill already ha%e set

!4 unreared d!)n the r!ad t! ruin* (ecause sel".kn!)led#e )ill n!t

ha%e in"!rmed us that )e lack the necessities "!r reachin# !ur

destinati!n&7 . The Mind !" a Trader* (y Alesh -& 'atel

7&&&y!u must (e discilined in "!ll!)in# the lan !" y!ur trade reli#i!usly&

Once y!u ha%e cl!sed y!ur !siti!n* y!u sh!uld rec!rd e%erythin# a(!utthe trade& Write d!)n )here y!u )anted t! enter the trade* )hat y!u

exected !ut !" the trade* and )hat y!u actually did #et !ut !" the trade&

Make sure t! include n!tes that )ill hel y!u learn "r!m the trade*

reas!nin# )hat actually t!!k lace !nce y!u entered the trade& Exlain

)hy the trade )as a )inner !r a l!ser& 6" y!u kee detailed rec!rds* y!u

can learn "r!m ast trades and increase y!ur chances !" rec!#ni/in# y!ur

stren#ths and )eaknesses& -uild !n y!ur stren#ths and stay a)ay "r!m

trades y!u ha%e dem!nstrated )eakness in&7 . The St!ck Trader* (y T!ny

O/



7The 3!urnal is %ery (asic and includes )hat trades 6 made durin# the day

and my reas!ns "!r #ettin# int! the trade& My 3!urnal has chan#ed a little

(it !%er time since my reas!ns "!r enterin# a trade n!) are retty

c!nsistent& There are t)! reas!ns "!r ha%in# a 3!urnal* in my !ini!n&

One reas!n is t! ha%e a manual (acku in case there1s a system !rs!"t)are "ailure& 6 had t! take ad%anta#e !" this a c!ule !" times* in !ne

instance )here the s!"t)are rec!rded the trade t)ice and ut me sh!rt a

st!ck (y mistake& The sec!nd reas!n that 6 ha%e ket a 3!urnal is "!r

learnin# and imr!%in# as a trader& 6 #! (ack and re%ie)* trade (y trade*

)hat 6 )as thinkin# and d!in# !ut !" the !rdinary in a #i%en )eek that

caused my results t! (e (etter !r )!rse than a%era#e& And really* 6 d!n1t

need a l!t !" detail in the 3!urnal& F!r me* 3ust ha%in# the trade and the

time and any !ther c!mments* such as )hether it )as an acti%e !r 2uiet

market* t! hel me re.li%e the day&7 . Al(ert Ma//!ne

7Deendin# !n the manner in )hich it is used* the market may (e a t!!l

!" either the in%est!r !r the #am(ler& 6" used in a redetermined* alied*

c!nsistent* and )ell.researched "ashi!n* the market )ill r!tect the

in%est!r "r!m infati!n* hel m!ney #r!) at an a(!%e.a%era#e rate* and

r!%ide retirement security& 6t is neither the #!al n!r the a(ility !"

#am(lin# t! r!%ide these& M!ti%ati!n is at the heart !" this issue& The

in%est!r )h! all!)s l!n#.term !(3ecti%es t! (ec!me !(scured can easily

(ec!me a #am(ler&7 . The 6n%est!r1s Qu!tient* (y 8ake -ernstein76" it )as easy t! )in* there )!uld (e m!re chami!ns& The techni2ues

are simle& The eternal 2uesti!n is h!) t! (alance atience and

rudence %ersus #!in# "!r the h!me run & & &6n tradin#* ullin# the tri##er

!n )hen t! trade is 3ust as im!rtant as all the rearati!n and attenti!n

t! detail that )ent (e"!re& 6" a trade d!es n!t d! )ell at the start* the

trader must (e discilined and ha%e )hat.i" scenari!s in lace "!r

alternate c!urses !" acti!n& As l!n# as the circumstances "!r makin# the

trade are still in e4ect* the trader can stay )ith the !siti!n&7 . The

Educati!n !" a Seculat!r* (y 5ict!r :iederh!4er 76mulsi%e e!le ha%e a )ay !" understandin#* and a m!de !" acti!n*

that* in c!maris!n )ith n!rmal deli(erati!ns and intenti!ns* )e )!uld

c!nsider imaired& This imaired )ay !" (eha%i!ur sh!)s itsel" as lack !"

c!ntr!l . actin# !n )him* #i%in# in t! temtati!n* d!in# )hat y!u ha%e

t!ld y!ursel" n!t t! d!& A ers!n )h! decides t! trade G c!ntracts and

then trades a G l!t and says 16 3ust did it . 6 d!n1t kn!) )hy1 is actin#

imulsi%ely&

7All %arieties !" imulse* )him* !r ur#e are essentially the same a

dist!rti!n !" n!rmal desires and )ants* a s!rt !" sei/ure that !%errides



#!!d sense& 6mulsi%e e!le are n!t sel".c!n$dent (ut simly h!e and

)ish "!r results& They ha%e n! l!n#.term #!als* !nly immediate ur#es&

Their (eha%i!ur is a(rut* immediate* and unlannedB the time (et)een

th!u#ht and executi!n is %ery (rie"& This is n!t t! su##est that 2uickness

in tradin# is a ne#ati%e& T! the c!ntrary* it is essential t! #!!d traders*(ut the di4erence is in the si/e !" c!mmitment the ers!n takes !n the

sur !" the m!ment* and the existence >!r a(sence? !" an underlyin#

lan& The net !utc!me !" unlanned (eha%i!ur is that )hen "ailure

!ccurs* the inte#rated r!cess mal"uncti!ns and the ers!n cann!t

accrue e4ecti%e 0haters "r!m the l!ss& With!ut a lan* imulsi%e e!le

can1t de%el! sustained meth!ds t! determine )hat )!rks and )hat

d!esn1t& They can1t understand )hy they "ailed* and they can1t

understand* as #!!d traders d!* that a "ailed lan is (ene$cial (ecause it

leads t! a%!idin# the same mistakes in the "uture&7 . 'rinciles !"

'r!"essi!nal Seculati!n* (y 5ict!rSerande!


acc!rdin# t! my tradin# system is the secret t! my success&&&6" y!u )ant

t! imr!%e y!ur tradin#* )hat y!u need t! d! is %ery simle& -e"!re y!u

enter any trade* think that y!u )ill ha%e t! exlain this trade t! the )!rld


mana#ement #uidelines* and )hy y!u exited the trade& 6" y!u can truly

d! this* 6 h<ly (elie%e that y!u can en3!y the same tye !" success 6 ha%een3!yed in this challen#e&7 . The St!ck Trader* (y T!ny O/

7-e"!re y!u decide y!u1%e disc!%ered an easy )ay t! make m!ney s!lely

(y shad!)in# the ticker tae* let me assure y!u a#ain the !(%i!us hardly

e%er )!rks in the st!ck market& Exerienced r!"essi!nals kn!)

in%est!rs are infuenced (y (i# trades aearin# !n uticks* s! d!n1t #et

t!! carried a)ay )ith )hat c!uld (e a )ell.ad%ertised tae tra& The real

r!(lem )ith tae analysis is the tae refects all tradin#* #!!d and (ad&

:!t all !" the acti!n y!u see !n the tae is #!!d* s!und* c!rrect (uyin#&&&

An!ther r!(lem )ith tae )atchin# is it is !siti%ely t!! excitin# andem!ti!nal& 6t re2uires c!nstant disciline t! a%!id (ein# s)et al!n# )ith

the ramant "e%er )hen a st!ck kees ad%ancin# until y!u1re c!n%inced

it1s #!in# t! #! 1strai#ht thr!u#h the r!!"& 7When y!u #et this "eelin# in

the it !" y!ur st!mach* the st!ck is r!(a(ly t!in#* since it )ill als!

l!!k "antastic t! e%ery!ne else& When it is that !(%i!us* alm!st e%ery!ne

has (!u#ht that can (uy& Remem(er* the ma3!rity* !r cr!)d* !ini!n is

rarely ri#ht in the st!ck market& 76" y!u sit (y the ticker tae t!! much*

y!u 3ust #et t!! cl!se t! the "!rest t! see the trees& And a(!%e all* the

m!st im!rtant thin#s a )inner must ha%e in the st!ck market are



ersecti%e* disciline* and sel".c!ntr!l&7 . ,!) T! Make M!ney in St!cks*

(y William 8& O1:eil


acc!rdin# t! my tradin# system is the secret t! my success&&& 6" y!u )ant

t! imr!%e y!ur tradin#* )hat y!u need t! d! is %ery simle& -e"!re y!uenter any trade* think that y!u )ill ha%e t! exlain this trade t! the )!rld


mana#ement #uidelines* and )hy y!u exited the trade& 6" y!u can truly

d! this* 6 h<ly (elie%e that y!u can en3!y the same tye !" success 6 ha%e

en3!yed in this challen#e&7 . The St!ck Trader* (y T!ny O/

7Traders )h! l!se "!ll!) !ne !" se%eral tyical atterns& S!me reeatedly

su4er indi%idual lar#e l!sses that )ie !ut earlier #ains !r #reatly

increase a small l!ss& Others exerience (rie" eri!ds durin# )hich their

tradin# )heels "all !4B they l!se disciline and c!ntr!l and make a series

!" (ad trades as a result& The )ise trader makes many small trades*

remains in%!l%ed and c!nstantly maintains and sharens his "eel "!r the

market& F!r all !" his )!rk* he h!es t! recei%e s!me r!$t* e%en i" it is

small in d!llar terms& 6n additi!n* c!ntinual articiati!n all!)s him t!

sense and rec!#ni/e the "e) real !!rtunities )hen they arise& These

#enerate the lar#e re)ards that make the e4!rt !" tradin# truly

)!rth)hile&7 . Steidlmayer !n Markets* (y 8& 'eter Steidlmayer

7There are numer!us similarities (et)een the seri!us trader and theseri!us #am(ler& 6n the casin!* the di4erence (et)een the )inner and

the l!ser is that the "!rmer lea%es the ta(le )hen he has reached his

#!al "!r the sessi!n* and the latter lea%es )hen he has l!st his stake&

M!st #am(lers* like many traders* d!n1t reali/e that the !nly )ay they

can st! #am(lin# is (y l!sin#&7 . The Mind !" the Markets* (y F& 8& 0hu

EFFORT

7Satis"acti!n lies in the e4!rt* n!t in the attainment& Full e4!rt is "ull

%ict!ry&7 . Al(ert Einstein

E=O

7@!ur e#! is (!th insirin# and "ull !" deceit& On the sur"ace* it aears t!

(e helin# y!u* it #i%es y!u small (!!sts !" #rati$cati!n )hen y!u

succeed& ,!)e%er* it is als! !ne !" the (i##est hindrances y!u )ill "ace

in li"e& @!u see y!ur e#! 3ust )ants y!u t! (e sa"e* t! ha%e "un and t! (e



the (est ; y!ur e#! hates "ailure* it l!athes n!thin# m!re* and this is

)here m!st e!le #! )r!n#7& . An!nym!us

76 (ecame a )innin# trader )hen 6 )as a(le t! say* 7T! hell )ith my e#!*

makin# m!ney is m!re im!rtant&7 . Marty Sch)art/

7One thin# 6 kn!) "!r sure y!ursel" c!ncet has t! (e searate "r!my!ur tradin#& @!u (e#an as an indi%idual l!n# (e"!re y!u e%er th!u#ht !"

tradin#& And y!u exist as an indi%idual (ey!nd the time y!u send

tradin#& When ers!nal sel".)!rth #ets tan#led u )ith y!ur tradin#* it

n!t !nly dama#es y!ur c!ncet !" y!ur ers!nal )!rth* it sa(!ta#es y!ur

tradin#& @!u must n!t internalise the mistakes y!u make& @!u must learn

t! di%!rce y!ur e#! "r!m y!ur tradin#7& . 8!e R!ss

7Ask y!ursel" )hether the market dama#ed y!ur $nancial security !r

!nly defated y!ur e#!& 6" the market has dama#ed y!ur $nances* y!u1ll

ha%e t! sa%e m!re* !r send less& -ut d!n1t )!rry a(!ut y!ur e#!& 6n

time it )ill infate t! its "!rmer si/e&7 . Ken ,!ma

76n this )!rld* man has t)! si#ni$cant !ssessi!ns intelli#ence and

em!ti!n& These t)! !ssessi!ns #!%ern !ur day.t!.day li"e& -ut %ery

!"ten )e see that em!ti!n >e#!? #ets the uer hand in !ur li"e& We kn!)

that e%en i" s!me!ne is extremely intelli#ent* )hen his em!ti!n c!mes t!

the "!re it )ill de%!ur him& ,e is c!melled t! d! )hat his em!ti!n asks

him t! d!&7. Sri 0hinm!y

7E#! is the E(!la %irus t! the acti%e trader& There is an antid!te*h!)e%er humility& At the !nset !" aralysin# e#!* humility must (e

administered at !nce* !r results can (e "atal& 6t is e%en m!re e4ecti%e i"

administered in ad%ance* n!t unlike %accine& 0an y!u !r 6 (ec!me

in"ectedC O" c!urse& What can (e d!ne t! r!tect a#ainst e#! and its

de%astatin# e4ectsC 'ay cl!se attenti!n t! the "!ll!)in# "!ur areas sel".

kn!)led#e* market kn!)led#e* tradin# strate#y and risk mana#ement&

Ans)er the hard 2uesti!ns "!r y!ursel"* (e"!re the market d!es& 9ike

meditati!n* !r exercise* attenti!n must (e aid each day "!r maximal

e4ecti%eness&7 . 8!hn A Sarkett7The (est traders ha%e n! e#!& T! (e a #reat trader* y!u ha%e t! ha%e a

(i# en!u#h e#! in the sense that y!u ha%e c!n$dence in y!ursel"& >-ut?

y!u cann!t let e#! #et in the )ay !" a trade that is a l!serB y!u ha%e t!

s)all!) y!ur ride and #et !ut&7 . T!m -ald)in

7Remem(er* )hen the market c!rrects itsel"* )hich it al)ays d!es* n!

!siti!n is immune* n! matter h!) h<ly y!ur e#! may (e tied t! it&7 .

Da%id 8enyns

7@!u must learn t! realise that y!u cann!t make the market #! y!ur )ay*

y!u must #! the market1s )ay and must "!ll!) the trend&7 . WD =ann



EMOT6O:A9 'A6:

7A%!idin# the em!ti!nal ain !" re#ret causes y!u t! sell )inners t!!

s!!n and h!ld !n t! l!sers t!! l!n#&7 . 6n%estment Madness* (y 8!hn R&

:!"sin#er

FA0TUA99@ R6=,T

7@!u1re neither ri#ht n!r )r!n# (ecause !ther e!le a#ree )ith y!u&

@!u1re ri#ht (ecause y!ur "acts are ri#ht and y!ur reas!nin# is ri#ht . and

that1s the !nly thin# that makes y!u ri#ht&7 . Warren -u4ett

FATE

7Man (lames "ate "!r !ther accidents (ut "eels ers!nally res!nsi(le "!r

a h!le.in.!ne&7 . Martha -eckman

FRUSTRAT6O: TO9ERA:0E

7'e!le exerience "rustrati!n )hen they "eel their #!als ha%e (een

th)arted& There are many times durin# the tradin# day that e%ents #!a#ainst us as )e try t! execute a tradin# strate#y & We may n!t #et the

rice )e )ant* !r )e may n!t (e a(le t! exit the )ay )e had lanned&

The extent t! )hich !ne reacts t! these set(acks )ith "rustrati!n )ill

redict tradin# success&7 . S!urce Unkn!)

FU:DAME:TA9S

7St!ck rices are anch!red t! 7"undamentals7 (ut the anch!r is easily

ulled u and dr!ed in an!ther lace& =i%en that exected #r!)th

rates and the rice the market is )illin# t! ay "!r #r!)th can chan#e

raidly !n the (asis !" market sych!l!#y* the c!ncet !" a $rm intrinsic

%alue "!r shares must (e an elusi%e )ill.!.the.)is&7 . -urt!n Malkiel

76n%est!rs )ill n!t )ake u !ne day and realise that the st!ck y!u1re

c!nsiderin# is t!! chea& St!ck rice sur#es re2uire s!me s!rt !"

stimulus* such as an unanticiated icku in demand !r a take!%er (id&7 .

Martin Frids!n

7Detailed analysis !" >year.!n. year? chan#e in a c!many1s net cash!siti!n is ne#lected at !ne1s eril& 0!manies ha%e hu#e lee)ay t!





make their r!$ts )hat they )ant them t! (e& Any sensi(le >$nance

direct!r? )ill maintain a st!ckile !" r!%isi!ns a%aila(le "!r release as

and )hen re2uired& Earnin#s #r!)th is there"!re the meanin#less

di4erence (et)een t)! num(ers that ha%e (een maniulated& 0ash is

"act* n!t !ini!n* and there"!re m!re di+cult t! maniulate&7. :i#elDa%ies

=ROU' 'RESSURE

70!n"!rmin# t! #r!u ressure is a u(i2uit!us hen!men!n& 6n the

markets* many e!le 7"!ll!) the herd7 rather than l!t their !)n

c!urse& 6t1s esecially di+cult t! #! a#ainst #r!u !ini!n in the market*

)hen y!u ha%e y!ur m!ney !n the line& @!u may ha%e de%el!ed anin%estment strate#y that su##ests that a st!ck rice )ill increase* (ut it1s

hard t! stick t! that strate#y )hen e%ery!ne else is sellin#& There is

sa"ety in num(ers& The m!st success"ul in%est!rs* h!)e%er* d!n1t

c!n"!rm t! #r!u ressure& They stick t! their in%estment lan*

re#ardless !" )hat !ther in%est!rs are d!in#& ,!) much !" a c!n"!rmist

are y!uC7 . S!urce Unkn!)n

,A:D96:= SU00ESS7Success is a c!m(inati!n !" merit* luck* and the relati%e a(sence !"

unc!nsci!us inner !(stacles* (ut the last !" that triad is erhas the

rimary culrit res!nsi(le "!r the ma3!rity !" "ailures& 6n "act* e%ery(!dy

is a success& That startlin# declarati!n rests !n the "act that

unc!nsci!usly* )e (asically #et )hat )e )ant& The rimary r!(lem is

that !nce !(tained* )e realise that )hat )e #!t is n!t )hat )e truly

)anted* resultin# in (!red!m* escaism* mysteri!us "ati#ue* mi#raines*

and the much.dreaded 1midli"e crisis&1 We1re retty #!!d at #ettin# )hat)e think )e )ant in li"eB the real r!(lem is ascertainin# )hat it is that

)e really )ant& The unc!nsci!us is a c!mellin# "!rce )ithin the essence

!" !ur e#!B it !erates !n a le%el that is in%isi(le and all.!)er"ul* such

that #r!)in# u intellectually d!es n!t mean )e necessarily #r!) u

em!ti!nally& S!me e!le !%erc!me their in"antile "antasies and !thers

d! n!t* resultin# in the n!rmal and the neur!tic . e%en th!u#h neither

ers!n any l!n#er c!nsci!usly demands the im!ssi(le& Excessi%ely

(lamin# arents is a hallmark !" the latter&7 . Mass 'sych!l!#y* (y 8ames

Dines



7As )e1%e seen&&&the dan#er !nce y!u1%e ridden a #!!d m!%e is

arr!#ance& @!u #et t! think y!u1re smart* and all y!u need t! d! is trade

t! make m!ney& The !ld clich has it that it1s much easier t! make

m!ney than t! kee it& And the clich is dead ri#ht "!r this hase in the

tradin# cycle& There is n!thin# easier than t! #i%e (ack in a c!ns!lidati!nall that y!u1%e made in a #!!d m!%e& @!u1re thinkin# in terms !" (i##er

stakes& @!u1re careless& @!u1re !n a r!ller& @!u #et recklessB and y!u "all t!

ieces& 5ery discilined traders may (e a(le t! handle this hase* (ut "!r

lesser m!rtals* the (est disciline is t! #et !ut and )ait "!r the market t!

ti its hand a#ain* the )ay it did )hen y!u made y!ur !ri#inal lay "!r

the m!%e&7 . The Way !" the D!llar* (y 8!hn 'erci%al

76n !rder t! (e a success"ul trader* y!u must (e "ree t! trade& 6n !rder t!

trade* y!u must understand and (e a(le t! de"end y!ursel" in the (attle

!" ideas& Als!* y!u must "eel that makin# m!ney is er"ectly m!ral* and

the ch!ice !" h!) much t! make is y!urs& 9astly* y!u must (elie%e that

y!u d!n1t !)e s!ciety y!ur li"e* and that !ther e!le d! n!t !)e y!u

theirs&7 .'rinciles !" 'r!"essi!nal Seculati!n* (y 5ict!r Serande!

7What dri%es a (ull market is n!t s! much #reed as #randi!sity& When

rices c!ntinue t! escalate* in%est!rs (e#in t! "eel like 6carus . they "eel

increasin#ly excited and caa(le !" fyin# hi#her and hi#her& S! l!n# as

these (elie"s are harnessed t! a lar#er rati!nal lan that 3!ins c!rrect

data t! a #randi!se r!3ect* these fyin# "antasies )ill "uel realisticam(iti!n* "!r the narcissistic enhancement that c!mes "r!m this c!ulin#

leads t! n!rmal sych!l!#ical (u!yancy and ride& Where #randi!sity is

slit !4 "r!m n!rmal reas!nin#* h!)e%er* increasin# de$cits in

in%estment reality testin# )ill (e seen& 6n the case !" #reed* the inherent

c!mulsi!n t! make u "!r deri%ati!n al)ays c!ntains a lack !" reality

testin# and e%entually c!ntri(utes t! the in%est!r1s d!)n"all&&&Th!se

)h!se #reed is "uelled (y archaic #randi!sity tend t! (e c!ntinual l!sers

in the market* )hile aearin# !ut)ardly as extremely success"ul&7 . The

'sych!l!#y !" 6n%estin#* edited (y 9i"s!n and =eist70!nsistency in day tradin# )ill c!me "r!m stickin# t! a m!ney

mana#ement lan& The market can (e extremely hum(lin#& Many traders

take all the credit )hen they are success"ul and (lame the market )hen

they are n!t& The reality is that* )ith "e) exceti!ns* y!ur trades )ill

ne%er really chan#e the market& @!ur G shares !" 6ntel ha%e alm!st

n!thin# t! d! )ith the st!ck1s next m!%e& The market )ill "uncti!n )ith

y!u !r )ith!ut y!u& 6t d!esn1t matter i" y!u made milli!ns "!r the last G

years strai#ht . it is essential t! de$ne )hat y!u are )illin# t! risk n!)

and stick )ith it& The main reas!n that m!st traders "ail a"ter #reat



successes is that their e#!s dra# them d!)n& They #et "ull !"

themsel%es&7 . Electr!nic Day Traders1 Secrets* (y Fried"erti# and West

7Durin# the G years 6 traded "!r =e!r#e S!r!s* 6 ne%er heard him seak

!nce a(!ut a )innin# trade& T! hear him talk* y!u1d think he had had

n!thin# (ut l!sers& 0!n%ersely* listenin# t! the (i##est l!sers* y!u1d thinkthey had n!thin# (ut )inners&&&S!r!s #a%e me this ad%ice !n an !ccasi!n

)hen 6 had sc!red a (i# )in "!r him 10lim( !4 y!ur h!rse& @!u1re !nly as

#!!d as t!m!rr!)1s trade& Why are y!u al)ays $#htin# the trendC Why

d! y!u make it s! hard "!r y!ursel"C Are y!u a mas!chistC7 . The

Educati!n !" a Seculat!r* (y 5ict!r :iederh!4er

7E#! is an!ther r!(lem& E#! can (e de%astatin#& 6 $rmly (elie%e that i"

y!u ha%e an e#! )hen y!u1re tradin# the markets* y!u )ill !tentially

#i%e (ack )hat y!u1%e made& E#! )ill kee y!u in )hen y!u1re su!sed

t! #et !ut&7 . 6n%estment Madness* (y 8!hn R& :!"sin#er

7Th!se in%!l%ed )ith the seculati!n are exeriencin# an increase in

)ealth . #ettin# rich !r (ein# "urther enriched& :! !ne )ishes t! (elie%e

that this is "!rtuit!us !r undeser%edB all )ish t! think that it is the result

!" their !)n sueri!r insi#ht !r intuiti!n& The %ery increase in %alues thus

catures the th!u#hts and minds !" th!se (ein# re)arded& Seculati!n

(uys u* in a %ery ractical )ay* the intelli#ence !" th!se in%!l%ed&7 .

8!hn Kenneth =al(raith* A Sh!rt ,ist!ry O" Financial Euh!ria

7When in%est!rs are h!t.)hen they make se%eral in%estment ch!icesthat er"!rm exceedin#ly )ell.there is a rekindlin# !" rimiti%e

#randi!sity& They "eel like the (asket(all layer )h!se e%ery sh!t f!ats

#race"ully thr!u#h the net in the $rst hal" !" the #ame& 6n%inci(le*

(rilliant* and master st!ck ickers* such in%est!rs can d! n! )r!n#* make

n! mistakes& Risk* they (elie%e* is "!r the "aint !" heart& They make such

insi#ht"ul decisi!ns that they need n!t c!nsider the idea !" risk& The

(rilliant in%est!r "eels anal!#!us t! the child !r the ad!lescent )h!se

#randi!se "antasies c!n"er a sense !" in%ulnera(ility& There is thus a

articular kind !" risk.an accident r!neness !r an err!r r!neness.c!mm!n t! (rilliant in%est!rs that tends t! acc!unt "!r a re#ressi!n t!

the mean in l!n#.term er"!rmance&&&Only in th!se "e) in%est!rs such as

Warren -u4ett* )h! ha%e their #randi!sity )ell c!ntained* can

!utstandin# er"!rmance (e maintained&7 . The 'sych!l!#y !" 6n%estin#*

edited (y 9i"s!n and =eist

7D!n1t (e a her!& D!n1t ha%e an e#!& Al)ays 2uesti!n y!ursel" and y!ur

a(ility& D!n1t e%er "eel that y!u are %ery #!!d& The sec!nd y!u d!* y!u

are dead& 8esse 9i%erm!re* !ne !" the #reatest seculat!rs !" all time*

re!rtedly said that* in the l!n# run* y!u can1t e%er )in tradin# markets&



That )as a de%astatin# 2u!te "!r s!me!ne like me* 3ust #ettin# int! the

(usiness& The idea that y!u can1t (eat the markets is a "ri#htenin#

r!sect& That is )hy my #uidin# hil!s!hy is layin# #reat de"ence& 6"

y!u make a #!!d trade* d!n1t think it is (ecause y!u ha%e s!me uncanny

"!resi#ht& Al)ays maintain y!ur sense !" c!n$dence* (ut kee it incheck&&&6 am m!re scared n!) than 6 )as at any !int since 6 (e#an

tradin#* (ecause 6 rec!#ni/e h!) ehemeral success can (e in this

(usiness& 6 kn!) that t! (e success"ul* 6 ha%e t! (e "ri#htened& My

(i##est hits ha%e al)ays c!me a"ter 6 ha%e had a #reat eri!d and 6

started t! think that 6 kne) s!methin#&7 >'aul Tud!r 8!nes? . Market

Wi/ards* (y 8ack Sch)a#er

7Th!se in%!l%ed )ith the seculati!n are exeriencin# an increase in

)ealth . #ettin# rich !r (ein# "urther enriched& :! !ne )ishes t! (elie%e

that this is "!rtuit!us !r undeser%edB all )ish t! think that it is the result

!" their !)n sueri!r insi#ht !r intuiti!n& The %ery increase in %alues thus

catures the th!u#hts and minds !" th!se (ein# re)arded& Seculati!n

(uys u* in a %ery ractical )ay* the intelli#ence !" th!se in%!l%ed&7 .

8!hn Kenneth =al(raith* A Sh!rt ,ist!ry O" Financial Euh!ria

70!nsistency in day tradin# )ill c!me "r!m stickin# t! a m!ney

mana#ement lan& The market can (e extremely hum(lin#& Many traders

take all the credit )hen they are success"ul and (lame the market )hen

they are n!t& The reality is that* )ith "e) exceti!ns* y!ur trades )illne%er really chan#e the market& @!ur G shares !" 6ntel ha%e alm!st

n!thin# t! d! )ith the st!ck1s next m!%e& The market )ill "uncti!n )ith

y!u !r )ith!ut y!u& 6t d!esn1t matter i" y!u made milli!ns "!r the last G

years strai#ht . it is essential t! de$ne )hat y!u are )illin# t! risk n!)

and stick )ith it& The main reas!n that m!st traders "ail a"ter #reat

successes is that their e#!s dra# them d!)n& They #et "ull !"

themsel%es&7 . Electr!nic Day Traders1 Secrets* (y Fried"erti# and West

7When y!u #et success"ul y!u tend t! #et sl!y and 6 think 61%e (een

a(le t! !%erc!me that& @!u !%erc!me it (ecause y!u kind !" !ut#r!) it&When 6 in%est n!)* 6 d!n1t #et hay* and 6 d!n1t #et sad& 6 really d!n1t

#et excited !r "eel any em!ti!n& 61ll c!me h!me and tell my )i"e* 1,ey

h!ney )e made * t!day*1 !r )hate%er* and she1ll (e 3umin# u

and d!)n and 61ll 3ust (e c!ld $sh* my "ace d!esn1t chan#e& 61m thinkin#

t! mysel"* )e c!uld l!se it all t!m!rr!)* >lau#hs?& @!u1re thinkin#* )hat

d! 6 d! n!)* )hat1s the next strate#y& @!u (ec!me m!re (usiness like*

)hich takes the "un !ut !" it* (ut 6 think that1s )hat y!u ultimately ha%e

t! d!* i" y!u1re #!in# t! d! this "!r a li%in#& 6 think i" y!u #! t! the f!!r !"

the exchan#es m!st traders are this )ay&7 . Mike McD!nald



7What dri%es a (ull market is n!t s! much #reed as #randi!sity& When

rices c!ntinue t! escalate* in%est!rs (e#in t! "eel like 6carus . they "eel

increasin#ly excited and caa(le !" fyin# hi#her and hi#her& S! l!n# as

these (elie"s are harnessed t! a lar#er rati!nal lan that 3!ins c!rrect

data t! a #randi!se r!3ect* these fyin# "antasies )ill "uel realisticam(iti!n* "!r the narcissistic enhancement that c!mes "r!m this c!ulin#

leads t! n!rmal sych!l!#ical (u!yancy and ride& Where #randi!sity is

slit !4 "r!m n!rmal reas!nin#* h!)e%er* increasin# de$cits in

in%estment reality testin# )ill (e seen& 6n the case !" #reed* the inherent

c!mulsi!n t! make u "!r deri%ati!n al)ays c!ntains a lack !" reality

testin# and e%entually c!ntri(utes t! the in%est!r1s d!)n"all&&&Th!se

)h!se #reed is "uelled (y archaic #randi!sity tend t! (e c!ntinual l!sers

in the market* )hile aearin# !ut)ardly as extremely success"ul&7 . The

'sych!l!#y !" 6n%estin#* edited (y 9i"s!n and =eist

7As )e1%e seen&&&the dan#er !nce y!u1%e ridden a #!!d m!%e is

arr!#ance& @!u #et t! think y!u1re smart* and all y!u need t! d! is trade

t! make m!ney& The !ld clich has it that it1s much easier t! make

m!ney than t! kee it& And the clich is dead ri#ht "!r this hase in the

tradin# cycle& There is n!thin# easier than t! #i%e (ack in a c!ns!lidati!n

all that y!u1%e made in a #!!d m!%e& @!u1re thinkin# in terms !" (i##er

stakes& @!u1re careless& @!u1re !n a r!ller& @!u #et recklessB and y!u "all t!

ieces& 5ery discilined traders may (e a(le t! handle this hase* (ut "!rlesser m!rtals* the (est disciline is t! #et !ut and )ait "!r the market t!

ti its hand a#ain* the )ay it did )hen y!u made y!ur !ri#inal lay "!r

the m!%e&7 . The Way !" the D!llar* (y 8!hn 'erci%al

7@!u h!ld !n t! a l!sin# !siti!n (ecause dee d!)n inside* y!u d!n1t

)ant t! )in& S!und ridicul!usC Then )hy kee a l!ser )hen e%ery ad%is!r

and statistic tells y!u t! #et rid !" itC -ecause !" e%ents that t!!k lace

early in y!ur li"e . !"ten an intensely c!metiti%e relati!nshi )ith a

same.sex arent . y!u1re a"raid !" d!in# )ell&7 . The 'sych!l!#y !" Smart

6n%estin#* (y 6ra Estein P Da%id =ar$eld

,ERD ME:TA96T@

7Why c!mlicate y!ur li"e (y di##in# "!r m!re in"!rmati!n and

c!nsiderin# the r!s and c!ns . )ith the risk !" (ein# )r!n# . )hen it1s

much easier t! d! )hat !ther e!le in the nei#h(!urh!!d are d!in# and

t! think like themC A"ter all* there must (e a reas!n "!r their (eha%i!ur

and th!u#hts&7. An!nym!us&



7The cr!)d tends t! "!ll!) the )r!n# si#ns near the market t!s and

(!tt!ms&7 . Marty )ei#

7The st!ck market )!rks )ell m!st !" the time& 6t is a decentralised mix

!" enthusiasm and sceticism* l!n#s and sh!rts . a #l!(al c!nfict !"

!ini!n and 3ud#ement that kees rices )ithin a reas!na(lear!ximati!n !" %alue& @et seculati!n at times sirals !ut !" c!ntr!l*

and the market (ec!mes a sin#le.minded m!(&7 . 8ames Sur!)iecki

7The secret* 6 think &&& t! (uy st!cks at a (ar#ain rice* y!u ha%e t! d!

the !!site t! the cr!)d& When y!u1re #!in# t! the same meetin#s )ith

the !ther e!le in Manhattan it1s hard t! (e di4erent&7 . 8!hn Temlet!n

7'e!le #et carried a)ay& They hear st!ries !" their nei#h(!urs #ettin#

rich and they )ant a iece !" the acti!n& They $#ure* s!meh!)* that the

rice !" st!cks >GL<L? !r d!tc!m start.us >GLLL? !r real estate ><H?

can !nly #! u& A symt!m !" this cr!)d sych!l!#y is that the tyical

in%est!r dislays ex2uisitely (ad timin#& The ec!n!mist 6lia Diche% !" the

Uni%ersity !" Michi#an has calculated 1d!llar.)ei#hted1 returns "!r ma3!r

st!ck indicesB this is a )ay !" ad3ustin# "!r in%est!rs rushin# int! the

market at certain times& 6t turns !ut that 1d!llar.)ei#hted1 returns are

su(stantially l!)er than 1(uy and h!ld1 returns& 6n !ther )!rds* in%est!rs

f!!d in )hen the market is near its eak* tendin# t! (uy hi#h and sell

l!)& The herd instinct seems t! c!st us m!ney&7. Tim ,ar"!rd

7Fi#ht the cr!)d& 6t is )arm and "u//y in ; cr!)ds ; y!u d! n!t need t!(e )arm and "u//y )ith in%estin#&7 . Seth Klarman

7There is n! d!u(t that there are many m!re 1in%estment r!"essi!nals1

and )ay m!re 6Q in the $eld* as it didn1t use t! l!!k that r!misin#&

6n%estment data are a%aila(le m!re c!n%eniently and "aster t!day& -ut

the (eha%i!ur !" in%est!rs )ill n!t (e m!re intelli#ent than in the ast*

desite this& ,!) e!le react )ill n!t chan#e their sych!l!#ical

make.u stays c!nstant& @!u need t! di%!rce y!ur mind "r!m the cr!)d&

The herd mentality causes all these 6Qs t! (ec!me aralysed& 6 d!n1t

think in%est!rs are n!) actin# m!re intelli#ently* desite theintelli#ence& Smart d!esn1t al)ays e2ual rati!nal& T! (e a success"ul

in%est!r y!u must di%!rce y!ursel" "r!m the "ears and #reed !" the

e!le ar!und y!u* alth!u#h it is alm!st im!ssi(le&7 . Warren -u4ett

7:!r )ill 6 (uy market. "a%!ured st!cks& 6 articularly n!tice it )hen 6

attend meetin#s "!r techn!l!#y st!cks and see all the e!le cr!)din#

int! the r!!m and s! !n& 6" there1s standin# r!!m !nly* that1s usually a

retty "air si#n it1s n!t a #!!d time t! (uy the st!ck&7 . 'hil Fisher



,EROES

7,er!es are myths& The #reat in%est!rs !" the ast )ere m!stly

inn!%at!rs& 6" they )ere ali%e t!day they )!uldn1t d! it n!) the )ay they

did it then&; Alm!st e%erythin# "r!m the ast is !(s!lete &&& it is amistake t! say thin#s like* 76 )ant t! (e an in%est!r like -en =raham7

(ecause he )!uldn1t d! it n!) like he did it then&7 . Kenneth 9 Fisher

,ES6TAT6O:

70!nditi!ns are ne%er 3ust ri#ht& 'e!le )h! delay acti!n until all "act!rs

are "a%!ura(le d! n!thin#&7. William Feather

7S! d!n1t (uy st!ck )hen y!u d!n1t kn!) )here it1s c!min# "r!m and y!u

d!n1t kn!) )hat it1s d!in#& Take r!$ts )hen y!u can* n!t )hen y!u

ha%e t!& When a trade is in y!ur "a%!ur* take r!$ts& At a minimum* sell

hal"& When a trade turns a#ainst y!u* y!u1re n!t (etter than the market .

3ust #et !ut& Simle stu4& -ut y!u kn!) )hatC :!(!dy "!ll!)s it&

6ncludin# me&7 . Electr!nic Day Traders1 Secrets* (y Fried"erti# and West

7Success"ul in%est!rs strike a (alance (et)een th!u#ht and acti!n*

(et)een research and intuiti!n& At s!me !int* they ha%e t! sh!%e their

intellectual acti%ity aside and m!%e& As the !ld sayin# #!es* he )h!

hesitates is l!st&7 . The 'sych!l!#y !" Smart 6n%estin# (y 6ra Estein andDa%id =ar$eld

7Fear is the m!st de(ilitatin# !" em!ti!ns (ecause it shrinks "r!m

c!n"r!ntati!n )ith its !(3ect& This )ithdra)al lends itsel" t! the

"!rmulati!n !" "antasies )hich are di+cult t! disen#a#e "r!m& 6n its

ina(ility t! c!n"r!nt reality* "ear is the s!urce !" all chr!nic "eelin#s !"

inade2uacy and inner emtiness& The main r!(lem )ith "ear is that it is

sel".rein"!rcin#& When )e act u!n the (asis !" "ear* the "ear increases&7 .

The Mind !" the Markets* (y F& 8& 0hu

7There is a $ne line (et)een stu((!rnness and c!n%icti!n& Day tradersare in essence m!%in# tar#ets that are n!t attached em!ti!nally t! any

st!ck& They are >!r are su!sed t! (e? !(3ecti%e* and )hile ha%in#

c!n%icti!n in the t!!ls and trend at a #i%en m!ment* day traders )ill n!t

hesitate t! take a st!* )ith!ut e%en a sec!nd th!u#ht )hen a trade

turns (ad&7 . The Under#r!undtrader&c!m =uide t! Electr!nic Tradin#* (y

8ea @u

76 think that !ne !" the m!st di+cult thin#s "!r me is (ein# a##ressi%e& 6

$nd that 61m n!t a naturally a##ressi%e ers!n& 6 )as ne%er a star athlete*

!r anythin# like that* s! 6 d!n1t ha%e that attackin#.tye !" ers!nality&



6t1s al)ays (een hard "!r me t! 3um in there& O"tentimes* )hen 6 see

)hat l!!ks like a #!!d !!rtunity* 6 d!n1t take the trade ri#ht a)ay

(ecause 61m t!! . and 6 d!n1t )ant t! admit it . (ut it1s really (ecause 61m

t!! scared& 6 d!n1t )ant t! risk l!sin# m!ney& Un"!rtunately* th!se times

are usually the (est trades& That1s !ne thin# that 61%e (een )!rkin# !n .(ec!min# a##ressi%e and takin# the trade&7 . S!urce Unkn!)n

7:!)* there are se%eral ma3!r r!(lems that result )hen "ear (ec!mes a

m!ti%ati!n t! d! !r n!t d! s!methin#& First it )ill limit y!ur ran#e !"

ercei%ed !!rtunities (y narr!)in# y!ur "!cus !" attenti!n* keein# it

!n the !(3ect !" y!ur "ear&&&@!ur "ear )ill systematically exclude "r!m y!ur

a)areness market in"!rmati!n that )!uld indicate the existence !" !ther

alternati%es and !!rtunities&&&Fear )ill als! limit y!ur ran#e !"

res!nses t! any #i%en situati!n& Many traders su4er c!nsidera(ly )hen

they kn!) exactly )hat they )ant t! d! (ut* )hen the m!ment arri%es*

$nd themsel%es c!mletely imm!(ili/ed&7 . The Discilined Trader

De%el!in# Winnin# Attitudes* (y Mark D!u#las

7-e"!re any!ne can (ec!me success"ul in an en%ir!nment )ith the

unstructured character !" the tradin# en%ir!nment* !ne needs t! de%el!

a sureme sense !" sel".c!n$dence and sel".trust& 6 am de$nin# sel".

c!n$dence as an a(sence !" "ear and sel".trust kn!)in# )hat t! d! at

the m!ment )hen it needs t! (e d!ne* and then d!in# it )ith!ut

hesitati!n&7. The Discilined Trader De%el!in# Winnin# Attitudes* (yMark D!u#las

7Acc!rdin# t! "!lkl!re* #reed and "ear dri%e $nancial markets& -ut this is

!nly artly c!rrect& While "ear d!es lay a r!le* m!st in%est!rs react less

t! #reed and m!re t! h!e& Fear induces an in%est!r t! "!cus !n e%ents

that are esecially un"a%!ura(le* )hile h!e induces him !r her t! "!cus

!n e%ents that are "a%!ura(le&7 . -ey!nd =reed and Fear* (y ,ersh

She"rin

7The e4ects !" "ear !n !ne1s (eha%i!ur are !(%i!us* limitin# !ne t! the

!int !" c!mlete imm!(ility& 6" y!u can1t execute y!ur trades r!erly*e%en )hen y!u ercei%e the m!st er"ect !!rtunity* it is (ecause y!u

ha%e n!t released y!ursel" "r!m the ain c!ntained in the mem!ries !"

ast tradin# exeriences and (ecause y!u still d!n1t trust y!ursel" t! act

ar!riately in any #i%en set !" c!nditi!ns& 6" y!u did* there )!uld (e n!

"ear !r imm!(ility&7 . The Discilined Trader De%el!in# Winnin#

Attitudes* (y Mark D!u#las

7&&&tradin# is "ar m!re an art than a science& When a trader makes a

decisi!n* he ne%er "ully kn!)s )hy he is makin# that decisi!n& @!u ha%e

t! think a(!ut y!ur trade and the market ni#ht and day* (ut at s!me



!int y!u )ant t! ull the tri##er& @!u ha%e th!u#ht !" hundreds !" thin#s

!%er the re%i!us "e) days* s! that i" 6 ask y!u* 1Why are y!u (uyin# !r

)hy are y!u sellin#C 1 y!u )ill n!t (e a(le t! #i%e a #!!d ans)er& @!u

may (e a(le t! #i%e a "e) reas!ns* (ut that )ill n!t (e the "ull ans)er&

The entire messa#e is e%erythin# y!u ha%e th!u#ht a(!ut !%er the lastthree days* and that )!uld take three days t! exlain& A l!t !" it is

su(c!nsci!us& @!u d! n!t really kn!) )hy y!u are ullin# the tri##er& T!

that extent it is m!re an art than a science* (ecause y!u cann!t "ully

dem!nstrate )hy y!u are d!in# )hat y!u are d!in#&7 . The Mind !" a

Trader* (y Alesh -& 'atel

7When 61%e !(ser%ed !ther traders* the (est !nes are al)ays a##ressi%e&

They d!n1t e%en think a(!ut the trade* they 3ust d! it& And that1s a trait

that 6 really admire& -ut the thin# is* they1re a##ressi%e and they take

care !" their caital& They1re !nly a##ressi%e )hen they ercei%e a #!!d

!!rtunity& As s!!n as the !!rtunities disaear* !r i" they1re l!sin#

m!ney* then they st!& 6t1s seems like a kind !" a s)itch that they can

turn !n and !4* )hich 6 think is a really #!!d thin#&7 . Michael Friesen

7-e fexi(le& My hil!s!hy has necessarily chan#ed "r!m time t! time

(ecause !" e%ents and (ecause !" mistakes& My %ie)s chan#e as

ec!n!mic* !litical* and techn!l!#ical chan#es !ccur (!th !n and n!) !4

!ur lanet& 6t is imerati%e that y!u (e )illin# t! chan#e y!ur th!u#hts t!

meet ne) c!nditi!ns&7 . The 6n%est!r1s Anth!l!#y* (y 0harles D& Ellis7-e"!re any!ne can (ec!me success"ul in an en%ir!nment )ith the

unstructured character !" the tradin# en%ir!nment* !ne needs t! de%el!

a sureme sense !" sel".c!n$dence and sel".trust& 6 am de$nin# sel".

c!n$dence as an a(sence !" "ear and sel".trust kn!)in# )hat t! d! at

the m!ment )hen it needs t! (e d!ne* and then d!in# it )ith!ut

hesitati!n&7 . The Discilined Trader De%el!in# Winnin# Attitudes* (y

Mark D!u#las

,6:DS6=,T

7,indsi#ht is an exact science&7. =uy -ellamy

,6STOR@

7,ist!ry )!uld (e )!nder"ul thin# . i" it )ere !nly true&7 . 9e! T!lst!y

,UM696T@



7,umility leads t! stren#th and n!t t! )eakness& 6t is the hi#hest "!rm !"

sel".resect t! admit mistakes and t! make amends "!r them&7 . 8!hn

>8ay? Mc0l!y

6=:ORA:0E

76 kn!) n!thin# excet the "act !" my i#n!rance&7 N S!crates

6M'OSTER ',E:OME:O:

7D! y!u e%er "eel as i" y!u are an im!sterC 'sych!l!#ists ha%e (een

studyin# a hen!men!n called the 76m!ster Syndr!me&7 S!me %ery

success"ul e!le (elie%e that they are im!sters& They (elie%e that they

are success"ul (ecause !" an accident !r luck* rather than their hard

)!rk and e4!rt& Success"ul in%est!rs may (e r!ne t! exerience the

im!ster syndr!me& 6n the #eneral u(lic* e!le ass!ciate the markets

)ith the l!ttery !r #am(lin#& Many e!le (elie%e makin# a r!$t !n a

trade is a matter !" ure chance !r #!!d "!rtune* rather than s!lid

rearati!n and hard )!rk& E%en r!"essi!nal in%est!rs and traders may

(elie%e in luck !r chance as a l!#ical exlanati!n "!r their )innin#s&7

S!urce Unkn!)n

6M'RO56:= -RA6: FU:0T6O:

7We all )ant a (rain that stays healthy )hen )e1re !lder* (ut )e als!

)ant a (rain that1s )!rkin# at t! seed and e+ciency t!day& -reak"ast

is the m!st im!rtant meal !" the day& Start !ut the day )ith a meal that

is l!) in "at* hi#h in r!tein and l!) in car(!nates and su#ar& This )ill

hel y!u achie%e eak mental er"!rmance durin# the day& Seci$cally

eat r!tein $rst and then c!mlex car(!hydrates in y!ur meal& The )ay

)e eat cann!t !nly hel us (e m!re intelli#ent* alert and success"ul in

mental acti%ities* (ut als! m!re (alanced in !ur em!ti!ns and (eha%i!ur&

The )ay t! (uild a "!undati!n "!r a healthy (rain is )ith a healthy diet

and sulementati!n&7 . S!urce Unkn!)n

6:DE'E:DE:T T,6:K6:=

7>8!hn? Temlet!n n!tes* 1Simle c!mm!n sense tells y!u that the l!)estrice "!r an asset can !ccur !nly )hen the maximum num(er !" !)ners

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are essimistic&1 6t has t! (e that )ayB it can (e n! !ther& 6" G d!ct!rs

tell y!u t! take a certain medicati!n* y!u1d (e )ise t! take it& 6" G ci%il

en#ineers tell y!u t! (uild a (rid#e a certain )ay* then y!u sh!uld (uild

it that )ay& -ut in selectin# securities* c!nsensus is dan#er!us& Adds

Temlet!n* 16" ten security analysts tell y!u t! (uy a certain asset* staya)ay& That !ularity must (e already refected in a hi#h rice&7 . The

'sych!l!#y !" 6n%estin#* edited (y 9i"s!n and =eist

7=r!u mem(ers may catch a "e) trends* (ut they #et killed )hen trends

re%erse& When y!u 3!in a #r!u* y!u act like a child "!ll!)in# a arent&

Markets d! n!t care a(!ut y!ur )ell.(ein#& Success"ul traders are

indeendent thinkers&7 . Tradin# "!r a 9i%in#* (y Alexander Elder

7:e%er "!r#et that markets are made u !" e!le& Think c!nstantly

a(!ut )hat !thers are d!in#* )hat they mi#ht d! in the current

circumstances* !r )hat they mi#ht d! )hen th!se circumstances chan#e&

Remem(er that )hene%er y!u (uy and h!e t! sell hi#her* the ers!n

y!u sell t! )ill ha%e t! see s!me !!rtunity at that hi#her rice in !rder

t! (e induced t! (uy&7 . Steidlmayer !n Markets* (y 8& 'eter Steidlmayer

7A seculat!r sh!uld ne%er (e temted t! #i%e u his fexi(ility& 6" he #ets

himsel" l!cked int! an in%estment* !r deri%es himsel" !" "reed!m t!

chan#e his mind* he is #i%in# u his st!ck in trade&7 . Trader1s Mani"est!*

(y D!nald W!rden

7Remem(er that a trader is s!me!ne )h! d!es his !)n h!me)!rk* hashis !)n #ame lan* and makes his !)n decisi!ns& Only (y actin# and

thinkin# indeendently can a trader h!e t! kn!) )hen a trade isn1t

)!rkin# !ut& 6" y!u e%er $nd y!ursel" temted t! seek !ut s!me!ne

else1s !ini!n !n a trade* that1s usually a sure si#n that y!u sh!uld #et

!ut !" y!ur !siti!n&7 >9inda -rad"!rdRaschke? . The :e) Market Wi/ards*

(y 8ack Sch)a#er

76" )e uncritically accet )hate%er %alues !r ideas )e1%e (een tau#ht (y

arents* teachers !r church* ne%er 2uesti!nin# these ideas !r askin#

!ursel%es i" these ideas really make sense* then )e are deendentthinkers >e%en i" the ideas are true?& 6" )e re3ect )hat !ur arents*

teachers !r church ha%e tau#ht us simly (ecause they say s!methin# is

ri#ht* d!es that make us indeendent thinkersC :!* that1s 3ust )hat

sych!l!#ists call 7anti.c!n"!rmity7 rather than n!n.c!n"!rmity& Makin#

u y!ur !)n mind is an acti!n* n!t a reacti!n&7 . S!urce Unkn!)n

7When "!recasters ha%e t!! much in"!rmati!n* they !"ten (ec!me e%en

m!re inaccurate than )hen there is t!! little& Research !n h!rse

handicaers and !ther studies indicate that !nly early in"!rmati!n

a4ects !ne1s decisi!ns& Once the decisi!n is made* additi!nal



in"!rmati!n* e%en )hen c!ntradict!ry* )ill n!t cause the ers!n t!

chan#e his mind& 6n "act* as m!re and m!re in"!rmati!n (ec!mes

a%aila(le* it !nly rein"!rces his (elie"& Additi!nal in"!rmati!n d!es n!t

increase the 2uality !" decisi!n.makin#* !nly the certainty !" c!n%icti!n&

6t !nly adds a "alse sense !" security&7 . The Ta! 8!nes A%era#es* (y-ennett W& =!!dseed

7Em!ti!nal Sta(ility& Alth!u#h akin t! atience this trait is (r!ader in

sc!e& 6nitially* it is needed t! re%ent the in%est!r "r!m (ein# en#ul"ed

in )a%es !" !timism and essimism that eri!dically s)ee !%er Wall

Street& M!re!%er* it is re2uired t! searate the "acts "r!m the entan#led

)e( !" human em!ti!ns& -ernard -aruch said !nce that m!st "acts reach

Wall Street thr!u#h 1a curtain !" human em!ti!ns*1 and e%en

s!histicated r!"essi!nals in Wall Street $nd di+culty in distin#uishin#

"act "r!m em!ti!n&7 . The 6n%est!r1s Anth!l!#y* (y 0harles D& Ellis

7=!!d tradin# is a eculiar (alance (et)een the c!n%icti!n t! "!ll!) y!ur

ideas and the fexi(ility t! rec!#ni/e )hen y!u ha%e made a mistake& @!u

need t! (elie%e in s!methin#* (ut at the same time* y!u are #!in# t! (e

)r!n# a c!nsidera(le num(er !" times& The (alance (et)een c!n$dence

and humility is (est learned thr!u#h extensi%e exerience and mistakes&

There sh!uld (e a resect "!r the ers!n !n the !ther side !" the trade&

Al)ays ask y!ursel" Why d!es he )ant t! sellC What d!es he kn!) that 6

d!n1tC Finally* y!u ha%e t! (e intellectually h!nest )ith y!ursel" and!thers& 6n my 3ud#ment* all #reat traders are seekers !" truth&7 >Michael

Steinhardt? . Market Wi/ards* (y 8ack Sch)a#er

76 ne%er (uy st!cks !n tis* r!m!urs* !r inside in"!rmati!n& 6t simly is an

extremely uns!und in%estment ractice& O" c!urse* tis* r!m!urs* !r

inside in"!rmati!n seem t! (e )hat m!st e!le are l!!kin# "!r& -ut*

a#ain* )hat m!st e!le (elie%e and d! in the market d!esn1t )!rkB s!

(e)are 0ertain ad%is!ry ser%ices and s!me daily (usiness ne)saers

carry re#ular c!lumns "ed (y Street #!ssi* r!m!urs* tis* and lanted

ers!nal !ini!ns !r inside in"!rmati!n& This* in my !ini!n* is n!t them!st r!"essi!nal ar!ach* n!r is it t!! s!histicated& There are "ar

s!under and sa"er meth!ds !" in%estin# in the st!ck market&7 . ,!) T!

Make M!ney in St!cks* (y William 8& O1:eil

76n the st!ck market* resistance t! chan#e . !r infexi(ility . is an

in%est!r1s )!rst enemy* (ecause chan#e is c!nstant& F!r examle* )hen

a st!ck #!es "r!m G t! J* a su(se2uent dr! t! < s!meh!) makes it

l!!k under.riced . that < is hi#her than G d!es n!t alter the 7(ar#ain7

asect A su(se2uent rise t! J makes it l!!k 7t!! hi#h7 &&& 5ariati!ns

"r!m a $xed le%el !r 7Re"erence '!int7 al)ays l!!k )r!n#* and are



sych!l!#ical deri%ants !" the Anti.0han#e 0!ncets l!d#ed in the Mass

Mind&7 . Mass 'sych!l!#y* (y 8ames Dines

7My a(ility t! ad3ust my tradin# strate#y t! the tye !" market 61m

)!rkin# )ith in the here and n!) has (een a key t! my success& W!rkin#

)ith an e%!l%in# market all!)s !ne t! make chan#esB studyin# astmarkets d!esn1t& 0!ntinual ad3ustment is at the heart !" (ein# a #!!d

trader&7. Steidlmayer !n Markets* (y 8& 'eter Steidlmayer

6:5ESTME:T AD560E

76" in%estin# is n!t y!ur r!"essi!n ; at the end !" the day* y!u1re #!in#

t! ha%e t! trust s!me!ne& S! there are "!ur !r $%e simle rules @!u ha%e

t! study the aer trail ; read )hat the "und had t! say (e"!re a di+culteri!d& See h!) the "und (eha%ed durin# a %ery stress"ul eri!d& 6t all

c!mes !ut in t!u#h times& And als! y!u )ant t! make sure that )h!e%er

is mana#in# y!ur m!ney has m!st !" their "amily net )!rth in the same

in%estments* (ecause i" it1s #!in# t! (e #!!d en!u#h "!r y!u* it (etter (e

#!!d en!u#h "!r them& O" c!urse y!u )ant inte#rity* a smart cr!!k is

#!in# t! #et y!u e%ery time& The last is y!u ha%e t! ha%e a layman1s

understandin# !" the strate#y& @!u must ha%e a (asic #ras !" )hat the

mana#er is tryin# t! d!& 6" y!u d!n1t* y!u )ill (e shaken !ut at the )!rst

!ssi(le time ; y!u ha%e t! #et th!se $%e !r six dynamics* then y!u 3ustha%e t! trust s!me!ne&7 . -ruce -erk!)it/* The Fairh!lme Fund&

7A(!ut !ne in $%e attemts t! (eat the market !%er time )ill succeed&

This alies t! mutual "unds& 6t alies t! in%estment ad%is!rs& 6t alies

t! !rt"!li! mana#ers& And kn!)in# these !dds is the $rst ste t!)ard

ac2uirin# in%estment )isd!m&7 . Mark ,ul(ert* The ,ul(ert Financial

Di#est&

7Occasi!nal !ut(reaks !" th!se t)! suer c!nta#i!us diseases* "ear and

#reed* )ill "!re%er !ccur in the in%estment c!mmunity& The timin# !"

these eidemics is e2ually unredicta(le* (!th as t! durati!n and

de#ree& There"!re* ne%er try t! anticiate the arri%al !r dearture !"

either& Simly attemt t! (e "ear"ul )hen !thers are #reedy and t! (e

#reedy !nly )hen !thers are "ear"ul&7 . Warren -u4ett* -erkshire

,atha)ay&

7Desite %!lumes !" research attestin# t! the meanin#lessness !" ast

returns* m!st in%est!rs >and ers!nal $nance ma#a/ines?* seek

t!m!rr!)1s )inners am!n# yesterday1s& F!r#et it&7 . F!rtune ma#a/ine&

76ndi%idual decisi!ns can (e (adly th!u#ht thr!u#h* and yet (esuccess"ul* !r exceedin#ly )ell th!u#ht thr!u#h* (ut (e unsuccess"ul*



(ecause the rec!#nised !ssi(ility !" "ailure in "act !ccurs& -ut !%er time*

m!re th!u#ht"ul decisi!n.makin# )ill lead t! (etter results* and m!re

th!u#ht"ul decisi!n.makin# can (e enc!ura#ed (y e%aluatin# decisi!ns

!n h!) )ell they )ere made rather than !n !utc!me&7 . R!(ert Ru(in*

"!rmer treasury secretary&76t cann!t (e !ssi(le t! make relia(le redicti!ns a(!ut )hen the st!ck

market )ill rise !r "all& 6" it )ere !ssi(le* the market )!uld res!nd in

ad%ance and it c!uld n!t then rise and "all in the )ay it d!es& The "act

that market timin# must (e unredicta(le* (ut that in%est!rs clam!ur t!

kn!) )hen thin#s )ill haen* is r!(a(ly the sin#le main reas!n )hy s!

much n!nsense is )ritten a(!ut the st!ck market& 6t is an !ld En#lish

ada#e that a silly 2uesti!n )ill #et a silly ans)er&7 . Andre) Smithers&

Smithers P 0!&

7L !" e!le in the st!ck market* r!"essi!nals and amateurs alike*

simly ha%e n!t d!ne en!u#h h!me)!rk&7 . William O1:eil* William O1:eil

P 0!&

6:5ESTME:T 'S@0,O9O=@

7,!) im!rtant d! y!u think in%estme n t sych!l!#y isC 6 think it is L

!" the exerience& The sych!l!#ical asect in%!l%es mental rearati!n

"!r the !ssi(ility !" (ein# )r!n#* !r ha%in# t! cut (ack )hen trades aren!t )!rkin# ri#ht& Als!* it is crucial t! rec!#ni/e )hen "act!rs in y!ur li"e

are really detrimental t! y!ur tradin#* such as an ar#ument )ith y!ur

s!use* a di%!rce* !r a drinkin# r!(lem& @!u ha%e t! maintain a !siti%e

attitude* n! matter )hat* e%en )hen the )!l%es are at the d!!r& The

sych!l!#y is als! related t! the hysical art !" tradin#& @!u ha%e t! (e

hysically $t* like a (!xer !r a tennis layer& @!u sh!uld ha%e a #!!d

ni#ht1s slee& @!u sh!uld n!t drink any alc!h!l "r!m Saturday ni#ht until

the cl!se !" tradin# !n Friday&7 . 9arry 'esa%ent!

8O@OUS O'T6M6SM

76t1s a simle (ut di+cult truth that )e ha%e n! c!ntr!l !%er h!) the

)!rld treats us* !nly !%er h!) )e react t! it& The !ld 7#lass hal" "ull hal"

emty7 n!ti!n cr!s u in situati!n a"ter situati!n& Success"ul traders

tend t! see m!re !!rtunities than disa!intments* )hich many

e!le (elie%e t! (e !ne !" the reas!ns )hy they1re success"ul&7 . S!urce

Unkn!)n

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KEE' @OUR =OA9S 6: S6=,T

7They ur#ed her n!t t! 2uit& She ne%er had&&&until then& With !nly a hal"

mile t! #!* she asked t! (e ulled !ut& Still tha)in# her chilled (!dy

se%eral h!urs later* she t!ld a re!rter* 79!!k* 61m n!t excusin# mysel"*(ut i" 6 c!uld ha%e seen land 6 mi#ht ha%e made it&7 6t )as n!t "ati#ue !r

e%en the c!ld )ater that de"eated her& 6t )as the "!#& She )as una(le t!

see her #!al&7 . S!urce Unkn!)n

9EAR:6:=

7The (eauti"ul thin# a(!ut learnin# is that n! !ne can take it a)ay "r!m

y!u&7 . -&-& Kin#

79!sin# d!es n!t eat at me the )ay it used t!& 6 3ust #et ready "!r the

next lay* the next #ame* the next seas!n&7 . Tr!y Aikman

96M6TS

76" y!u limit y!ur ch!ices !nly t! )hat seems !ssi(le !r reas!na(le* y!u

disc!nnect y!ursel" "r!m )hat y!u truly )ant* and all that is le"t is a

c!mr!mise&7 . R!(ert Frit/

9O=60A9 AR=UME:T

7The s!under y!ur ar#ument* the m!re satis"acti!n y!u #et !ut !" it&7 .

Ed#ar Wats!n ,!)e

MA6:TA6:6:= A ,EA9T,@ ATT6TUDE

7Our a(ility t! maintain a healthy attitude may (e challen#ed )hen )e

"eel a l!ss !" c!ntr!l such as )hen )e "eel )e are n!t )here )e )!uld

like t! (e in !ur li%es& Studies ha%e sh!)n that e!le )h! (elie%e that

they ha%e c!ntr!l !" e%ents in their li%es maintain a (etter 2uality !" li"e

and (etter health as they #r!) !lder and exerience chan#e&7 . S!urce

Unkn!)n

MAKE T,E T6ME



7E%en the m!st deenda(le !" men )ill stum(le e%ery n!) and then*

a"ter all& ,e1ll tri !%er his !)n sh!es* )aylaid (y (ums in the r!ad !r

circumstances he ne%er exectedB he1ll thr!) !4 the (!nds !" (!th

cauti!n and c!mm!n sense& F!rtunately* 8!rie and Ethan1s s!n )as !n his

)ay t! sch!!l !n this M!nday !" the last )eek !" sixth #rade* "!r there)as n!thin# that c!uld ha%e ket Ethan a)ay "r!m 8!rie !n this day* n!t

)hen he "elt the )ay he did&7 . S!urce Unkn!)n

MA:A=6:= R6SK

7When y!u mana#e risk* y!u al)ays ha%e t! think !" )hat )!uld haen

sh!uld s!methin# #! )r!n#&7 . The St!ck Trader* (y T!ny O/

M6:D

7The mind has exactly the same !)er as the hands n!t merely t! #ras

the )!rld* (ut t! chan#e it&7 . 0!lin Wils!n

M6STAKES

7E%ery #reat mistake has a hal")ay m!ment* a slit sec!nd )hen it can(e recalled and erhas remedied&7 . 'earl S& -uck

7The st!ry !" Th!mas Edis!n is le#endary* )here a articular #entleman

en2uired !" the in%ent!r h!) it "elt t! ha%e "ailed s! many times in his

e4!rts t! r!duce an electric li#ht (ul(& Edis!n relied that he had n!t

"ailed at all* (ut rather he had success"ully "!und th!usands !" )ays h!)

n!t t! make a li#ht (ul( That kind !" healthy attitude t!)ard mistakes

ena(led Edis!n t! make a c!ntri(uti!n t! the )!rld that ri%als that !"

alm!st any!ne in hist!ry&7 . S!urce Unkn!)n

MODERAT6O:

7M!derati!n is the secret !" sur%i%al&7 . Manly ,all

MO:E@ MA:A=EME:T A:D S@STEMS



7M!ney mana#ement )ith!ut a meth!d !r system t! trade is useless&

Further* tradin# a meth!d )ith a ne#ati%e mathematical exectati!n is

ractically useless as )ell&7 . The Tradin# =ame* (y Ryan 8!nes

MOT65AT6O: TO A0,6E5E

7A man is rich in r!!rti!n t! the num(er !" thin#s he can a4!rd t! let

al!ne&7 . ,enry Da%id Th!reau

76t has l!n# (een rec!#ni/ed that an inner desire and dri%e is re2uired "!r

success"ul er"!rmance& What is the essence !" the 2uest "!r successC

What makes traders tenaci!usly stru##le t! re$ne techni2ue* imr!%e

strate#y* and stri%e "!r the summitC 9et1s c!nsider se%eral "act!rs

underlyin# the m!ti%ati!n t! achie%e* and h!) these elements mayimact er"!rmance&7 . S!urce Unkn!)n

:A'S 56TA9 FOR EFF606E:T -RA6: FU:0T6O:

7All y!u ha%e is n!)& The measure !" !ur eace !" mind and the measure

!" !ur ers!nal e4ecti%eness are determined (y h!) much )e are a(le

t! l!%e in the resent m!ment& Re#ardless !" )hat haened yesterday

and )hat mi#ht haen t!m!rr!)* :OW is )here y!u are& Fr!m this !int

!" %ie)* the key t! hainess and c!ntentment must (e in "!cusin# !ur

minds !n the resent m!ment7 . S!urce Unkn!)n

O''ORTU:6T6ES

7The (est in%estments are !"ten the !nes y!u did n!t make& T! make a

really #!!d in%estment ; is like $ndin# a needle in a haystack& M!st 7h!t

tis7 and 7must (uys7 !r 7#reat !!rtunities7 turn !ut t! (e disasters&

Only take %ery "e) in%estment decisi!ns* )hich y!u ha%e care"ully

analysed and th!u#ht a(!ut in terms !" risk and !tential re)ard&7 . Marc

Fa(er

79!ss !" !!rtunity is re"era(le t! l!ss !" caital& There )as a time

)hen 6 "elt it )as my duty t! (e ers!nally in%!l%ed in e%ery )rinkle !"

the SP'& 61%e traded this market since its inceti!n ; (ut it t!!k 2uite a

)hile "!r me t! realise that ickin# sa"e* reada(le and hi#h.r!(a(ility

)innin# trades )as the )ay t! #!&7. 8!e Di:a!li

7The (est !il exl!rati!n deals ne%er #et s!ld !utside !" Texas&Or#anisers !" limited artnershis can !rdinarily raise all the m!ney they



need am!n# their cl!se "riends* assumin# they ha%e #enuinely #!!d

r!sects& 6" y!u are a stran#er )ith a m!dest sum t! in%est* the "act

that y!u are (ein# !4ered the 7!!rtunity7 t! articiate is a reas!n t!

(e scetical&7 . Martin Frids!n

O'T6M6SM

7Otimists are indi%iduals )h! ersist e%en )hen they are "acin#

set(acks& 9!sses d!n1t #et them d!)n& 6ndeed* )hen they enc!unter

l!sses* they )!rk esecially hard& They li%e (y the m!tt!* 7When the

#!in# #ets t!u#h* the t!u#h #et #!in#&7 Success"ul traders %ie) l!sin#

trades as merely art !" the learnin# r!cess* and the m!ney they l!se

!n trades as a tye !" sch!!l tuiti!n they must ay "!r their tradin#educati!n& See )here y!u stand !n the scale* and )hat y!u sh!uld d! t!

imr!%e&7 . S!urce Unkn!)n

'AT6E:0E

7Exaserati!n is the mind1s )ay !" sinnin# its )heels until atience

rest!res tracti!n&7. =e!r#e 9& =ri##s

7'atience is assi!n tamed&7. 9yman A((!tt

'ERFE0T6O:

7@!u can send a li"etime* and* i" y!u are h!nest )ith y!ursel"* ne%er

!nce )as y!ur )!rk er"ect&7 . 0harlt!n ,est!n

'ROS'ER6T@

7-lessed is he )h! has reached the !int !" n! return and kn!)s it* "!r

he shall en3!y li%in#&7 . W& 0& -ennett

7'r!serity in the "!rm !" )ealth )!rks exactly the same as e%erythin#

else& @!u )ill see it c!min# int! y!ur li"e )hen y!u are unattached t!

needin# it&7 . Wayne Dyer

'RUDE:T MA:1S 9OSERS =AME



7The $sh* "eelin# sa"e )ith the end!rsement !" !ne !" the (i##ies* )ithin

sec!nds had trans"!rmed the !nd int! churnin# )hite )ater as it )as

e%ery tr!ut "!r himsel"& With a )!rm !n the (!ys h!!k* it )as a slau#hter*

as the tr!ut n!) !erated under the illusi!n !" sa"ety& The (!y s!!n

st!!d r!udly in "r!nt !" the !)ner1s d!!r )ith a strin# !" $"teen three.t!.$%e.!unders&7 . S!urce Unkn!)n

QU6TT6:=

7'ain is tem!rary& Quittin# is "!re%er 7 . 9ance Armh<

R6=,T S6DE OF T,E MARKET7They say there are t)! sides t! e%erythin#& -ut there is !nly !ne side t!

the marketB and it is n!t the (ull side !r the (ear side* (ut the ri#ht side&7

. Reminiscences !" a St!ck Oerat!r* (y Ed)in9e"e%re

R6SK 0O:TRO9

7Take calculated risks& That is 2uite di4erent "r!m (ein# rash&7 . =eneral

=e!r#e 'att!n7Wh! dares n!thin#* need h!e "!r n!thin#&7. 8!hann 5!n Schiller

7Risk and m!ney mana#ement take disciline t! imlement& 6n "act*

mana#in# risk #!es a#ainst the #rain !" !ur natural imulses& 'r!sect

the!ry dem!nstrates that e!le ha%e a natural tendency t! (ec!me risk

seekin# a"ter a series !" l!sses and t! (ec!me risk a%erse t! r!tect a

#ain& Our nature is t! d!u(le !ur (ets )hen )e are l!sin# and t! take

2uick r!$ts )hen )e are )innin#& -ut d!in# s! %irtually #uarantees that

)e )ill chase #!!d caital a"ter (ad and end u under."undin# )innin#

trades& Success"ul and r!$ta(le tradin# c!mes "r!m d!in# )hat d!es

n!t c!me naturally&7 . The Under#r!undtrader&c!m =uide t! Electr!nic

Tradin#* (y 8ea @u

7Trust y!ur hunches& They1re usually (ased !n "acts $led a)ay 3ust (el!)

the c!nsci!us le%el7& . Dr& 8!yce -r!thers

79et us n!t l!!k (ack in an#er !r "!r)ard in "ear* (ut ar!und in

a)areness&7. 8ames Thur(er .

7One !" my )eaknesses as a trader is that )hen a !siti!n is m!%in# in

my directi!n 6 l!!k at it in d!llar terms& 6n !ther )!rds* it1s tickin# (y !nmy screen in d!llars* and 6 kn!) this is a (ad thin# and that 6 need t!



l!!k at it in terms !" )hether this is a #!!d trade !r a (ad trade& ,!)

many !ints am 6 makin# !4 this tradeC What kind !" return am 6 #ettin#

!n the m!ney that1s in%ested in this tradeC 6nstead* 6 l!!k at it as d!llars

(ecause 6 see d!llars t!tallin# !n my 'P9 !n my c!muter screen& 6" 61%e

#!t a trade in "!r a minute and a hal"* and 6 start seein# a #ain !" t)!hundred and $"ty* three hundred d!llars* "!ur hundred and $"ty* $%e $"ty

. 61m temted t! take the m!ney and run& E%en th!u#h it has m!re t! #!

and technically the chart says it1s r!(a(ly #!in# t! #! hi#her* 61ll 3um

in* cut that trade* and take the m!ney& 6 "eel a l!t !" re#ret )hen 6 d!

that* (ecause it c!uld run an!ther $%e* six !ints&7 . Da%e Alexander

7These "aults can (e "!und in many traders and in%est!rs D! n!t (e

careless !r reckless )ith y!ur tradin#& @!u trade "!r r!$t* n!t "!r "un and

#ames& D! n!t (e timidB !nce y!u ha%e identi$ed an !!rtunity* attack

it& Act !n it& D! n!t #et an#ry !%er a l!sin# trade and s)ear t! #et e%en&

@!u )!n1t& D! n!t #et d!)n !n y!ursel" "!r a l!sin# trade* !r e%en a

strin# !" l!sin# trades& Find !ut )hat y!u are d!in# )r!n# and c!rrect the

r!(lem& D! n!t "all in l!%e )ith a st!ck* a (!nd* !r anythin# else& @!u

must learn that this is c!nfict* and y!u must (e rather mercenary )ith

y!ur tradin# and in%estin#&7 . Sun T/u1s Art !" War "!r Traders and

6n%est!rs* (y Dean 9undell

7A st! aut!matically takes y!ur (rain !ut !" re%erse and uts it int!

neutral& @!ur m!ney1s n!t (ack t! neutral* (ut y!ur mind1s (ack t! the!int )here y!u can re#r!u and try t! think u a "resh idea )ith!ut the

ressure !" a l!sin# !siti!n han#in# !%er y!ur head&7 . 'it -ull* (y

Martin Sch)art/

76" )e chan#e the de$niti!n !" risk t! enc!mass n!t !nly %!latility as an

external r!erty !" the market* (ut als! certain r!erties !" the sel"*

then )e (e#in t! ask di4erent and n!%el s!rts !" 2uesti!ns D! 6

exerience time as assin# sl!)ly !r 2uicklyC D! 6 ha%e any unres!l%ed

real !r em!ti!nal l!ssesC What is my t!lerance "!r sudden chan#eC What

is my r!ensity "!r shameC 0an 6 t!lerate uncertainty )ith!ut undueanxiety and denialC D! 6 ha%e m!re "aith in my !)n 3ud#ement that in

!thersC7 . The 'sych!l!#y !" 6n%estin#* edited (y 9i"s!n and =eist

7Acc!rdin#ly* as e%ery in%est!r e%entually learns* the m!re y!u kn!)*

the m!re y!u "eel y!u need t! kn!)& O"ten* the m!re y!u kn!)* the less

#!!d it d!es y!u* (ecause it (e#ins t! inhi(it& -ut h!) can y!u take a

risk* i" y!u d!n1t kn!) en!u#hC 6t1s easy t! (erate and deride !ther

ar!aches . "undamentalist* ec!n!mist* m!netarist . "!r "ailin# us like

)eathermen& Their (asic fa)s* !(%i!usly* are in (elie%in# that markets

can (e c!erced int! their !)n uer.middle.class %ie)s !" r!er



(eha%i!ur& -ut then* !" c!urse* !ur m!thers th!u#ht that a(!ut us* and

l!!k at h!) di+cult* and !"ten de$ant* )e1%e #r!)n u t! (e& E%en

technicians )ill admit that the market1s !)n messa#e isn1t clear* isn1t

c!nsistent* isn1t er"ect . at least n!t as er"ect as the c!muterists

(elie%e the c!muter can (e c!erced int! (ein#&7 . The :ature !" Risk (y 8ustin Mamis

7The rincile !" reser%ati!n !" caital imlies that (e"!re y!u c!nsider

any !tential market in%!l%ement* risk sh!uld (e the rime c!ncern&

Only )ithin the c!ntext !" the !tential risk sh!uld the !tential re)ard

(ec!me the determinin# "act!r in takin# a !siti!n& This is the true

meanin# !" riskre)ard analysis& 'r!erly alied* it sets the standard "!r

e%aluatin# n!t !nly )hether t! (e in%!l%ed in a trade !r in%estment* (ut

als! t! )hat de#ree& Thus* reser%ati!n !" caital . 1D!n1t l!se any1 .

(ec!mes the (asis "!r rudent m!ney mana#ement&7 . 'rinciles !"

'r!"essi!nal Seculati!n* (y 5ict!r Serande!

7E%ery case )ill (e di4erent* (ut the rule "!r #ettin# !ut h!lds )hat

matters is n!t h!) cl!se t! the $nal t! !r (!tt!m )e #et !ut . that1s

m!stly luck )hat matters* as n!ted* is that )e ha%e a rati!nal "!rmula

"!r #ettin# !ut )hich is )!rked !ut (e"!rehand& We can set a date )e

can use a cra)lin# st! )e can set a rice tar#et )e can use a

c!m(inati!n !" these meth!ds& -ut decidin# the "!rmula (e"!rehand is

the thin#&7 . The Way !" the D!llar* (y 8!hn 'erci%al7That1s the r!(lem )ith amateurs* they !nly ha%e hal" a lan* the easy

hal"& They kn!) h!) much a r!$t they1re )illin# t! take* (ut they d!n1t

ha%e the "!##iest idea h!) much they1re )illin# t! l!se& They1re like a

deer in the headli#hts* they 3ust "ree/e and )ait t! #et run !%er& Their

lan "!r a !siti!n that #!es s!uth is* 1'lease =!d* let me !ut !" this and

61ll ne%er d! it a#ain*1 (ut that1s (ullshit* (ecause i" (y chance the

!siti!n turns ar!und* they1ll s!!n "!r#et a(!ut =!d& They1ll #! (ack t!

thinkin# that they1re #eniuses* and they1ll al)ays d! it a#ain* )hich

means that they1re sure t! #et cau#ht* and #et cau#ht (ad&7 . 'it -ull* (yMartin Sch)art/

7The market is an imer"ect mechanism& -ecause a disr!!rti!nate

min!rity em(race risk as the c!mm!n den!minat!r !" r!$t* the market

ays risk.takers m!re than they deser%e in a mathematical sense& This is

(ecause the #reat ma3!rity !" n!n.risk.takers !%eray& There is n!

c!nsistent relati!nshi (et)een the riskiness !" an in%estment and the

ay!4* (ut it tends t! )!rk in "a%!ur !" the risk taker&7 . S!urce Unkn!)n

7First* 6 )!uld say that risk mana#ement is the m!st im!rtant thin# t!

(e )ell underst!!d& Under trade* under trade* under trade is my sec!nd



iece !" ad%ice& Whate%er y!u think y!ur !siti!n !u#ht t! (e* cut it at

least in hal"& My exerience )ith n!%ice traders is that they trade J t!

times t!! (i#& They are takin# t! G ercent risks !n a trade )hen they

sh!uld (e takin# G t! < ercent risks&7 . The Way !" the D!llar* (y 8!hn

'erci%al7Kee alert* and a##ressi%ely m!nit!r y!u in%estments& :! (ull market is

ermanent* and n! (ear market is ermanent& :! st!ck is a sure thin#*

and there are n! st!cks that y!u can 3ust (uy and "!r#et a(!ut& The ace

!" chan#e is #reat* and in%est!rs must exect and react ar!riately t!

it& T! act in y!ur !)n (est interests* y!u must (e reared* in"!rmed* and

)atch"ul !" y!ur in%estments& 0!mlacency !ens the d!!r t! surrise

and disa!intment& @!u must al)ays (e ready t! c!e )ith the chan#es

that )ill c!n"r!nt y!u&7 . Siritual 6n%estments* (y =ary M!!re

RU9ES

7@!u ha%e t! learn the rules !" the #ame& And then y!u ha%e t! lay

(etter than any!ne else&7. Al(ert Einstein

76" y!u must lay* decide u!n three thin#s at the start the rules !" the

#ame* the stakes* and the 2uittin# time&7 . 0hinese 'r!%er(

SEEK6:= 6:TER:A9 ,A''6:ESS

7There are t)! kinds !" leasure and su4erin#& There are hysical and

mental leasures and hysical and mental su4erin#& Our materialistic

r!#ress is "!r the sake !" achie%in# that hainess )hich deends !n

the (!dy and "!r #ettin# rid !" that su4erin# )hich deends !n the (!dy&

,!)e%er* it is indeed di+cult* isn1t it* "!r us t! #et rid !" all su4erin# (y

external meansC7 . S!urce Unkn!)n

SE9F.AWARE:ESS

7Tradin# has tau#ht me di4erent thin#s a(!ut mysel" at di4erent times

acc!rdin# t! h!) the situati!n has #!ne& 6t has tau#ht me that 6 can (e

%ery discilined* that 6 d!n1t ha%e t! ha%e external c!nstraints im!sed

!n me& 6t1s tau#ht me that 61m %ery sel".reliant& O"ten 6 can ut t!#ether

the 3i#sa) u//le* e%en th!u#h s!me ieces are missin# and )ill ha%e an

insi#ht int! a trade that !ther traders d!n1t ercei%e& S!metimes 6 realise61%e (een arr!#ant in the )ay 61%e d!ne s!methin#& 6t1s interestin# h!)



tradin# teaches us s!methin# a(!ut !ursel%es that )e d!n1t necessarily

)ant t! kn!) (ut the in"!rmati!n is al)ays %ery instructi%e&7 . The Ta! !"

Tradin#* (y R!(ert K!el

7Reas!na(le e!le act unreas!na(ly )hen they are a"raid& And e!le

(ec!me a"raid )hen they start t! l!se m!ney* their 3ud#ement (ec!mesimaired& This is !ur human nature in this sta#e !" !ur e%!luti!n& 6t

cann!t (e denied& 6t must (e underst!!d* articularly in tradin# the

market&7 . Mass 'sych!l!#y* (y 8ames Dines

7What )!rks in li"e is !"ten n!t )hat )!rks in tradin#& That is )hy e!le

)h! ha%e (een success"ul in !ther )alks !" li"e !"ten "ail t! (ec!me

success"ul traders& The skills they ha%e learnt t! achie%e success

else)here )ill actually !"ten accelerate "ailure in tradin#& =reat traders

ha%e an entirely di4erent %ie)!int& There is n! hidin# lace in tradin#&

@!u ha%e t! li%e )ith y!ursel"& 6t is n!t a 2uesti!n !" h!)* y!u ha%e t!

c!me t! terms )ith y!ursel"& @!u can1t lie t! y!ursel"& 6" y!u (elie%ed y!u

)ere tau#ht it then y!u start d!u(tin# )hat y!u had (een tau#ht*

)hereas i" y!u inherently (elie%e it any)ay there is n! 2uesti!n !"

d!u(tin# it (ecause it is )hat y!u (elie%e any)ay&7 . The Mind !" a

Trader* (y Alesh -& 'atel

7T!! many e!le r!mise t! 1d! the (est that they can*1 )ith!ut

reali/in# that 1the (est y!u can1 is limited (y y!ur c!ncet !" (est& 61m

su##estin# that y!u decide !n a num(er that1s a real stretch and thentrade in terms !" that num(er& The num(er y!u ch!!se is !nly limited (y

y!ur ima#inati!n& 6nstead !" )aitin# t! #et the c!n%icti!n* y!u start t!

lay at the le%el that y!u1%e ch!sen and #et the c!n%icti!n a"ter)ard & & &

The standard )ay )e all "uncti!n is t! d! )hat )e kn!) and r!duce the

"amiliar result (ecause that1s c!m"!rta(le* (ut t! c!mmit t! s!methin#

(ey!nd that is scary as hell& We1re all trained t! cut d!)n !n the ain (y

d!in# )hat1s reas!na(le& That1s the m!st secure lace t! (e* (ut it1s n!t

necessarily the (est lace t! (e& The c!m"!rta(le num(er* )hate%er it is*

is n!t tain# y!ur !tential !r stretchin# y!u&7 .Tradin# t! Win* (y AriKie%* M&D&

76 think tradin# has tau#ht me a l!t a(!ut mysel"& As a matter !" "act* 6

think the )h!le r!cess* i" y!u all!) y!ursel" t! really (e !en* is like

#!in# thr!u#h sych!theray e%ery day& 6t really #i%es y!u an

!!rtunity t! see )hat y!u1re all a(!ut& The market "!rces y!u* i" y!u1re

#!in# t! succeed* t! (e c!mletely h!nest )ith y!ursel"& 6" y!u1re l!sin#

m!ney* y!u are simly "!rced t! c!n"r!nt that reality& 6t1s an !(3ecti%e

reality* it1s ri#ht in "r!nt !" y!u* and y!u ha%e t! ackn!)led#e it&

Truth"ully* 6 (elie%e the market )eeds !ut e!le )h! are una(le t! (e



h!nest )ith themsel%es& 6 susect that tradin#* aside "r!m (ein# a

"ascinatin# )ay t! make a li%in#* is als! !ne !" the m!st sel".re%elat!ry

thin#s that a ers!n can d!& Day in and day !ut y!u1re c!n"r!nted )ith

all y!ur rimal em!ti!ns&7 . The Ta! !" Tradin#* (y R!(ert K!el

7F!r the ast GI years 61%e had a "riend )h!se )i"e is "at& She is anele#ant dresser* and she has (een !n a diet "!r as l!n# as 6 ha%e kn!)n

her& She says she )ants t! l!se )ei#ht and she d!es n!t eat cake !r

!tat!es in "r!nt !" e!le . (ut )hen 6 c!me int! her kitchen* 6 !"ten see

her #! at it )ith a (i# "!rk& She says she )ants t! (e slim* (ut remains as

"at t!day as the day )e met& WhyC The sh!rt.term leasure !" eatin# is

h<er "!r her than the delayed leasure and health (ene$ts !" )ei#ht

l!ss& My "riend1s )i"e reminds me !" a #reat many traders )h! say they

)ant t! (e success"ul (ut kee makin# imulsi%e trades . #!in# "!r the

sh!rt.term thrills !" #am(lin# in the markets& 'e!le decei%e themsel%es

and lay #ames )ith themsel%es& 9yin# t! !thers is (ad en!u#h* (ut lyin#

t! y!ursel" is h!eless& -!!kst!res are "ull !" #!!d (!!ks !n dietin#* (ut

the )!rld is "ull !" !%er)ei#ht e!le&7 . Tradin# "!r a 9i%in#* (y

Alexander Elder

70arl!s 0asteneda* in his (!!k The Teachin#s !" D!n 8uan A @a2ui Way !"

Kn!)led#e* !utlines D!n 8uan1s descriti!n !" the "!ur enemies !ne must

!%erc!me t! (ec!me a 1man !" kn!)led#e*1 !r in this case a )ise

in%est!r& The $rst enemy is "ear& 6" a man runs a)ay !ut !" "ear anda%!ids in%estin#* n!thin# )ill haen excet that he )ill ne%er learn&

Fear is !%erc!me (y clarity* )hich then (ec!mes an in%est!r1s sec!nd

enemy& 0larity !" mind a(!ut the in%estment r! c ess * )hich is hard t!

!(tain* disels "ears* (ut it als! (linds& 6" y!u yield t! this !)er* )hich is

!nly a !int (e"!re y!ur eyes* y!u ha%e succum(ed t! y!ur sec!nd

enemy& Remem(er* in analysis )hat can #et y!u int! tr!u(le is n!t )hat

y!u t!!k int! acc!unt* (ut rather the %aria(les y!u ne%er 2uesti!ned& @!u

must see y!ur clarity and use it !nly t! see* and )ait atiently and

measure care"ully (e"!re takin# the next ste& One )h! !%erc!mesclarity !ssesses !)er* (ut this t!! is an enemy& One )h! is de"eated

(y this third enemy* !)er* dies )ith!ut really kn!)in# h!) t! handle it&

T! c!n2uer !)er* y!u ha%e t! de"y it deli(erately& @!u must kee

e%erythin# in check and kn!) h!) t! use y!ur !)er& F!r 9a! Tsu* !)er

means understandin# 1the )ay !" the uni%erse&1 6" y!u d! n!t !ssess

such understandin#* !)er can c!me and #!& 6" y!u ha%e such !)er* it

sh!uld (e used !nly )hen it "eels ri#ht and n!t %ie)ed as an!intin# y!u

as the 1in%est!r "!r all seas!ns&17 . The Ta! 8!nes A%era#es* (y -ennett W&

=!!dseed







7'e!le hide thin#s "r!m themsel%es& 'sych!l!#ists call it reressi!n !r

denial& F!r#ettin# !r simly n!t seein# are )ays !" a%!idin#

disc!m"!rt&&&The r!(lem is that s!metimes thinkin# !" s!methin#

unleasant d!es ser%e a use"ul ur!se&&&6n y!ur tradin#* there is n!

r!!m "!r reressi!n !r denial& 6t is the !ne area !" y!ur li"e )here !nlyreality* in the urist "!rm !ssi(le* )ill su+ce&7 . Trader1s Mani"est!* (y

D!nald W!rden

7One sure )ay t! identi"y a true #am(ler is t! see )hether !r n!t he is

secretly uset (y the asserti!n that* 16t1s n!t )hat y!u )in* it1s )hat y!u

kee&1 True #am(lers kn!) that they )ill n!t kee anythin#* (ecause

they secretly intend t! l!se& Studies sh!) that #am(lers c!nsistently

!%erestimate their !)n skill* luck* and l!) r!(a(ilitiesB als! their

tendency t! !%erestimate chances t! )in is m!re likely )here there is a

need "!r achie%ement& Furtherm!re* !siti%e e%ents are learned m!re

raidly and "!r#!tten m!re sl!)ly than ne#ati%e e%ents* s! #am(lers

think that they are ahead (ecause they remem(er the (i#.)innin#

decisi!n* and they d!)nlay the m!re.numer!us l!sses& =am(lin# is a

classic examle !" 1intermittent rein"!rcement*1 !r artial re)ard* and

sych!l!#ical e%idence is !%er)helmin# that such e!le are eculiarly

resistant t! endin# this situati!n& 6" a #am(ler al)ays )!n* !r al)ays l!st*

he )!uld l!se interest* and it is recisely the c!nfict (et)een "ear and

#reed that hels kee the #am(ler in the #ame& 6r!nically* studies als!sh!) that e%en mathematically s!histicated #am(lers* )ith "ull

in"!rmati!n !" !dds and r!(a(ilities* ch!!se !!r risks m!st !" the

time&7 . Mass 'sych!l!#y* (y 8ames Dines

7Ultimately* y!ur tradin# er"!rmance and y!ur li"e are n!thin# (ut a

mirr!r !" y!ur c!nsistent th!u#hts and (elie"s* refecti!ns !" y!ur %alues

and y!ur character& While strate#ies* rules* and selecti!n meth!d!l!#ies

are im!rtant c!m!nents !" tradin#in%estin# success* they are 3ust a

$rst #iant ste t!)ard in%estment success& 'erhas e%en m!re im!rtant

is the r!cess y!u de%el! "!r systematically e%aluatin# y!ur successand mistakes in !rder t! learn* #r!)* and imr!%e y!ur tradin# and sel"&7

. The ,ed#e Fund Ed#e* (y Mark -!ucher

7The truth is that m!st indi%idual in%est!r1s "!ll!) n! in%estin# lan and

are %ery much rey t! their em!ti!ns& -uy decisi!ns are !"ten made

imulsi%ely* and sell decisi!ns are "re2uently made !ut !" suerstiti!n*

"ear* anxiety* #uilt* and mas!chism& A %ery c!mm!n examle !" this is

the in%est!r )h! d!es 3ust the !!site !" Wall Street1s maxim 0ut y!ur

l!sses* let y!ur )inners run& My research sh!)s that in%est!rs )h!

%i!late this maxim tend t! ha%e many !(sessi%e ers!nality traits&



O(sessi%e e!le ha%e a tendency t! (ec!me s! anxi!us )hen they !)n

a st!ck risin# in rice that they imulsi%ely sell at the $rst )eakness*

!"ten rati!nali/in#* 1@!u ne%er #! (r!ke takin# a r!$t&1 On the !ther

hand* )hen such an !(sessi%e ers!n !)ns a st!ck dr!in# in rice*

they kee sayin# t! themsel%es* 1When it #ets (ack t! )hat 6 aid "!r it* 6)ill sell it&7 . The 'sych!l!#y !" 6n%estin#* edited (y 9i"s!n and =eist

7There is a #!!d measure !" sel".kn!)led#e re2uired t! ch!!se the

r!er in%estment c!urse& 6t has e%en (een !stulated that many small

in%est!rs in the st!ck market* )ith!ut kn!)in# it* secretly )ant t! l!se&

They 3um in )ith hi#h h!es . (ut "eelin# %a#uely #uilty& =uilty !%er

1#am(lin#1 )ith the "amily1s m!ney* #uilty !%er tryin# t! #et 1s!methin#

"!r n!thin#*1 !r #uilty !%er lun#in# in )ith!ut really ha%in# d!ne much

research !r analysis& Then they unish themsel%es* "!r these !r !ther

sins* (y sellin# !ut* dem!rali/ed* at a l!ss&7 . The Only 6n%estment =uide

@!u1ll E%er :eed* (y Andre) T!(ias

7A th!r!u#h understandin# !" y!ursel" is essential in tradin#& ,!) y!u

think* )hat y!u (elie%e* and h!) y!u act !ut y!ur li"e are critical arts !"

)innin# in tradin# and )innin# in li"e& 5ery "e) e!le understand* !r are

a)are !"* this su(tlety in the tradin# r!"essi!n& 6n !ther careers* y!u can

#et (yB (ut in tradin#* y!u are 2uickly eliminated& The sad art is* m!st

e!le ha%e n! idea )hy they ha%e "ailed&7 . 'rinciles !" 'r!"essi!nal

Seculati!n* (y 5ict!r Serande!7When a trader makes a r!$t* he #i%es himsel" credit and "eels that his

3ud#ment is #!!d and that he did it all himsel"& When he makes l!sses* he

takes a di4erent attitude and seld!m e%er (lames himsel" !r tries t! $nd

the cause )ith himsel" "!r the l!sses& ,e $nds excusesB reas!ns )ith

himsel" that the unexected haened* and that i" he had n!t listened t!

s!me!ne else1s ad%ice* he )!uld ha%e made a r!$t& ,e $nds a l!t !" i"s*

ands* and (uts* )hich he ima#ines )ere n! "ault !" his& This is )hy he

makes mistakes and l!ses the sec!nd time& The in%est!r and trader must

)!rk !ut his !)n sal%ati!n and (lame himsel" and n! !ne else "!r hisl!sses* "!r unless he d!es* he )ill ne%er (e a(le t! c!rrect his

)eaknesses& A"ter all* it is y!ur !)n acts that cause y!u l!sses* (ecause

y!u did the (uyin# and the sellin#& @!u must l!!k "!r the tr!u(le )ithin

and c!rrect it& Then y!u )ill make a success* and n!t (e"!re&7 . The

6n%est!r1s Qu!tient* (y 8ac!( -ernstein

7The tr!u(le )ith sel"."ul$lment is that many e!le ha%e a sel".

destructi%e streak& Accident.r!ne dri%ers kee destr!yin# their cars* and

sel".destructi%e traders kee destr!yin# their acc!unts& Markets !4er

unlimited !!rtunities "!r sel".sa(!ta#e* as )ell as "!r sel"."ul$lment&



Actin# !ut y!ur internal c!nficts in the marketlace is a %ery exensi%e

r!!siti!n& Traders )h! are n!t at eace )ith themsel%es !"ten try t!

"ul$l their c!ntradict!ry )ishes in the market& 6" y!u d! n!t kn!) )here

y!u are #!in#* y!u )ill )ind u s!me)here y!u ne%er )anted t! (e&7 .

Tradin# "!r a 9i%in#* (y Alexander Elder7Em!ti!ns #et in the )ay !" makin# #!!d in%estment decisi!ns& F!r

examle* y!ur desire t! "eel #!!d a(!ut y!ursel" . seekin# ride . causes

y!u t! sell y!ur )inners t!! s!!n& Tryin# t! a%!id re#ret causes y!u t!

h!ld y!ur l!sers t!! l!n#& The c!nse2uences are that y!u sell the st!cks

that er"!rm ) e ll and kee the st!cks that er"!rm !!rly& This hurts

y!ur return and causes y!u t! ay hi#her taxes&7 . 6n%estment Madness*

(y 8!hn R& :!"sin#er

7@!u can1t kid y!ursel" in tradin#& @!u ha%e t! deal )ith )h! y!u really

are* and take res!nsi(ility "!r all y!ur sh!rtc!min#s* )hich the markets

ha%e a )ay !" re%ealin# rather starkly& @!u ha%e t! c!n"r!nt all y!ur "ears

and tame them& @!u ha%e t! check y!ur e#! at the d!!r& @!u learn "r!m

each exerience& There1s n!thin# in li"e that y!u can d! that can

#uarantee that y!u1re n!t #!in# t! #! thr!u#h s!me ain& Tradin# is

certainly n!t a sin#ular ursuit in that re#ard& What 6 ha%e learned is this

'atience and dili#ence are re)arded& 'r!$ts )ill e%entually accrue i" y!u

d! the ri#ht thin# and stick )ith it& That1s the m!st im!rtant thin#7 .

The Ta! !" Tradin#* (y R!(ert K!el

SE9F.ESTEEM . T,E FOU:DAT6O: FOR TRAD6:=SU00ESS

7Success"ul traders ha%e hi#h sel".esteem )hen it c!mes t! their tradin#&

They are c!n$dent that their tradin# decisi!ns are c!rrect& They are

c!n$dent that they ha%e interreted indicat!rs !r si#nals c!rrectly and

they are ready t! act 2uickly !n their analysis& When they make adecisi!n* they d!n1t sec!nd.#uess themsel%es !r d!u(t that they ha%e

made the ri#ht decisi!n& They 3ust stick )ith their meth!d and "!ll!)

thr!u#h* and accet the c!nse2uences* #!!d !r (ad& That isn1t t! say

that they d!n1t ha%e their share !" set(acks and disa!intments& On the

c!ntrary* they ha%e r!(a(ly "aced m!re set(acks in tradin# than

unsuccess"ul traders& The key di4erence is that they did n!t let these

set(acks disa!int them& They icked themsel%es u* m!%ed "!r)ard*

learned "r!m their mistakes* and )ent !n t! (ec!me success"ul traders&

De%el!in# hi#h tradin# sel".esteem is the "!undati!n "!r tradin#success& -y kn!)in# )here y!u stand !n this trait* and raisin# y!ur

http://www.psgonline.co.za/trade/buying_stocks_for_sale.php








tradin# sel".esteem i" y!u need t!* y!u can imr!%e y!ur tradin#

er"!rmance&7 . S!urce Unkn!)n

S6M'9606T@7Our li"e is "rittered a)ay (y detail& Simlicity* simlicity* simlicity7 .

,enry Da%id Th!reau

STRESS MA:A=EME:T

76t is crucial t! maintain a #!!d attitude* s! it is im!rtant t! ar!ach

in%estin# )ith !siti%e thinkin#& D!n1t (e #lum& A%!id "!!lish th!u#hts&

9earn "r!m e%ery exerience& D! )hat y!u are su!sed t! d!& :! d!!r

cl!ses that d!esn1t !en an!ther& 6" y!u ha%e y!ur health* y!u still ha%e

e%erythin# . )ith!ut health* y!u ha%e n!thin#& T!m!rr!) is an!ther day&

We li%e and learn& 9i"e #!es !n . this is the )ay it is and there"!re is

su!sed t! (e& 6n%estin# results are n! refecti!n !n y!ur manh!!d* !r

y!ur )!manh!!d& We ha%e us and d!)ns* and )e )ill re%ail& We ha%e

de"eats yet are ne%er de"eated& There are n! #uarantees& 6" y!u d!n1t

ha%e any !ther !ti!ns* y!u d!n1t ha%e a r!(lem* s! d!n1t )!rry a(!ut

)hat y!u can1t a4ectB the challen#e is t! understand )hen there are n!

!ther !ti!ns* and t! st! chasin# )hat d!es n!t )!rk& When y!u hear

(ad ne)s yet can1t chan#e it* d!n1t )!rry a(!ut itB the )!rld )as made

that )ay and it )ill remain s! l!n# a"ter )e1re #!ne& 9et thin#s (e&7 .

Mass 'sych!l!#y* (y 8ames Dines

7There are se%eral c!ncrete thin#s y!u can d! t! #ras )hat art y!ur

em!ti!ns lay in y!ur tradin# success !r "ailure& F!r instance* kee a

3!urnal !" y!ur "eelin#s s! that y!u can track y!ur em!ti!ns and m!re

easily see !ur r!#ress !r set(acks& -y ha%in# this detailed )ritten

in"!rmati!n* y!u can %isually "!ll!) y!ur r!#ress* and y!ur n!tes )illhel y!u m!re readily $nd s!luti!ns t! y!ur r!(lems& An!ther )ay t!

hel mana#e y!ur em!ti!ns is t! share y!ur "eelin#s )ith !thers& -y

discussin# y!ur "eelin#s a(!ut tradin#* y!u can hear* !ut l!ud* )hat y!u

are really thinkin# and h!) it imin#es u!n !r enhances y!ur tradin#&

9istenin# t! !thers may (rin# t! li#ht similar underlyin# (elie"s y!u may

(e "!sterin#&7 . Tradin# t! Win* (y Ari Kie%* M&D&

7What 6 e%entually learned )as* d!n1t trade t!! hea%ily the m!nth (e"!re

and t)! m!nths a"ter y!ur )i"e #i%es (irth& While her h!rm!nes are

chan#in#* y!urs are 3ust tryin# t! kee u& 6" y!u1re a #!!d hus(and*



y!u1re n!t stayin# h!me at ni#ht )!rkin# !n y!ur charts and $#urin# !ut

y!ur rati!s& F!r the m!nth (e"!re the (irth* y!u1re #!in# t! 9ama/e class

)!rkin# !n h!) t! (reathe* h!) t! ru( y!ur )i"e1s (ack& F!r the t)!

m!nths a"ter the (irth* the (a(y takes centre sta#e and y!ur )h!le

r!utine is thr!)n !ut !" )hack& @!u1re n!t #ettin# anythin# d!ne& @!u1reu t)!* three* "!ur times a ni#ht& @!u1re tryin# t! $#ure !ut i" y!u ha%e

the dis!sa(le diaer ri#ht side u !r uside d!)n& @!u1re al)ays tired*

y!u l!se y!ur c!ncentrati!n&7. 'it -ull* (y Martin Sch)art/

7@!u may need t! in%!ke sel".c!ntr!l mana#ement techni2ues* such as

makin# rules !" thum( and c!ntr!llin# y!ur in%estment en%ir!nment&

These techni2ues can hel y!u a%!id the mistakes caused (y lettin# y!ur

em!ti!ns and sych!l!#ical (iases infuence y!ur in%estment decisi!ns&

,!)e%er* y!u sh!uld als! understand )hy the rules exist and (e a(le t!

(end them i" creati%e thinkin# all!)s y!u t! increase y!ur )ealth&7 .

6n%estment Madness* (y 8!hn R& :!"sin#er

7O%erc!min# the r!ensity t! lay em!ti!nally re2uires a c!nsci!us

c!mmitment t! seci$c tradin# !(3ecti%es& This entails ch!!sin# a tar#et*

de%el!in# a strate#y* and $ndin# a meth!d "!r adherin# t! it& A #!al

ena(les y!u t! kee a relati%ely e%en keel thr!u#h #!!d and (ad eri!ds*

t! sustain m!mentum* and t! kee "r!m (ec!min# (!red&7 . Tradin# t!

Win* (y Ari Kie%* M&D&

7F!r me* kn!)in# h!) t! take a l!ss is r!(a(ly the m!st im!rtantin#redient "!r a success"ul trader* esecially a sh!rt.term trader& We

ha%e t! em(race risk e%ery day& 6" y!u d!n1t kn!) h!) t! mana#e the

di4erence (et)een y!ur e#! and takin# a l!ss* y!u1%e #!t a (i# r!(lem&

Mana#in# exectati!ns is the di4erence in this (usiness (et)een

succeedin# and "ailin#& 6 learned a l!n# time a#! n!t t! let my !)n

ers!nal issues !" sel".)!rth !r ar!%al ha%e anythin# t! d! )ith it& 6t1s

a (usiness like any !ther&7 . The -est 0!n%ersati!ns )ith T! Traders* (y

Marder and Duee

7Anxiety7 is a 9!) State* and results "r!m sendin# t!! much time in the"uture* excessi%e )!rry that is secretly en3!yed& 1Takin# One Day at a

Time1 is a ,i#h StateB sendin# t!! much time in the "uture is unished

(y 1Anxiety1 )hile #ettin# stuck in the ast is unished (y

7Re#rets7& 6ndeed* d)ellin# in the ast is unished (y hainess ha%in#

(een merely a mem!ry rather than ha%in# (een exerienced& The

market is n!t c!ncerned )ith )hat haened t! y!u in y!ur ast

in%estments& The s!luti!n is t! undertake y!ur study !" the "uture in a

raid and (usiness.like "ashi!n* and then r!mtly m!%e (ack t! the

resent take !ne day at a time* and li#hten u& -uy y!ur st!ck* set y!ur



st!* learn "r!m it* and then l!%e )hat y!u #et (ecause that1s the hand

y!u had li"e deal t! y!u . and it1s all y!u1re #ettin#& Mickey Mantle !nce

asked @!#i -erra )hat time it )as* and @!#i relied* 1@!u mean ri#ht

n!)C1 There are "e) States hi#her than 1Takin# One Day at a Time1B a"ter

all* t!day is the t!m!rr!) y!u )!rried a(!ut yesterday* and y!u1re stillhere&7 . Mass 'sych!l!#y* (y 8ames Dines





relax en!u#h t! r!(lem s!l%e and re.ad3ust ar!riately t! the

situati!n&7 . @!ur 'er"!rmin# Ed#e* (y8!Ann Dahlk!etter* 'h&D&





relax en!u#h t! r!(lem s!l%e and re.ad3ust ar!riately t! the

situati!n&7 . @!ur 'er"!rmin# Ed#e* (y8!Ann Dahlk!etter* 'h&D&

76n times !" #reatest ec!n!mic stress* the )!rst thin# y!u can d! as an

in%est!r is t! anic& Reacti!ns t! situati!ns that are (!rn !" "ear are

rarely )ise !r hel"ul& 'erhas y!u didn1t sell (e"!re e%ery!ne else (e#an

t!* and y!u1re in a market slum& There y!u are* "acin# a hu#e l!ss* all in!ne day& @!ur $rst instinct may %ery )ell (e t! call y!ur (r!ker and sell as

2uickly as y!u can& This is a classic anic reacti!n& D!n1t all!) y!ursel" t!

#i%e int! that initial anic attackB d!n1t rush t! sell the next day& The time

t! sell is (e"!re the crash* n!t a"ter& 6nstead* take a dee (reath* and

study y!ur !rt"!li!& 6" y!u didn1t !)n these st!cks n!)* )!uld y!u (uy

them a"ter the market crashC 0hances are that y!u )!uldB they1d (e

e%en cheaer& Sellin# them )!uldn1t (e a c!rrecti!n* (ut a reacti!n&7 .

Siritual 6n%estments (y =ary M!!re

7There is !ne %ery (i# sych!l!#ical distincti!n (et)een the !siti!ns !"shareh!lders and 0EO* )hich is !ne !" c!ntr!l& When times #! (ad* as

they did "!r FedEx* AO9* and any !ther #r!)in# c!many y!u c!uld think

!"* e!le )ithin the c!many can at least d! s!methin# a(!ut it& The

!!r shareh!lder can n! m!re make thin#s (etter that an airline

assen#er can eliminate clear.air tur(ulence& 6t1s n! )!nder that the

m!!d at in%estment instituti!ns is !"ten "ar less sel".assured than the

m!!d !" the c!many itsel"& 6t1s n! )!nder that c!ntr!l "reak in%est!rs

are am!n# the $rst t! (ail !ut in times !" crisis&7 . The 6nner =ame !"

6n%estin#* (y Derrick :iederman



79et us n!t l!!k (ack in an#er !r "!r)ard in "ear* (ut ar!und in

a)areness&7. 8ames Thur(er

7O" aram!unt im!rtance t! the trader* th!u#h* is "ear& 6 am c!n%inced

that it is a(s!lutely necessary t! 1run scared&1 Only an exa##erated

em!ti!n can #enerate the c!ncentrati!n necessary t! sur%i%e as a trader&Seculatin# is a stress (usiness& 6n s!rts )e see c!nstant

dem!nstrati!ns !" er"!rmin# under stress&&& 6t is the a(ility t! thri%e

under stress that sets the suerstars aart& An e4ecti%e trader handles

stress like an animal& ,is natural instinct !" sel".reser%ati!n emer#es

like that !" a (east in the 3un#le )hen challen#ed& ,is (eha%i!ur is

reduced t! ure* unsu(limated* utterly animal.like sel$shness& ,e cla)s

"!r )hat is his !r )hat he )ants t! (e his in the m!st #reedy "ashi!n& ,e

fees "r!m dan#er in the m!st c!)ardly "ashi!n& ,e "uncti!ns like a rat

cau#ht in a c!rner& There is n! c!nsiderati!n !" ride !r style !r ers!nal

#race !r h!n!ur !r (ra%ery& Sur%i%e s!meh!)& Win s!meh!)& As a

seculat!r* y!u must #et in t!uch )ith y!ur (aser instincts and learn t!

accet y!ursel" in that )ay& At the end !" the day* Dr& 8ekyl* #! h!me*

c!mlement y!ur )i"e* lay )ith y!ur kids* #i%e s!methin# t! charity*

listen t! -eeth!%en* )rite !etry&7 . Trader1s Mani"est!* (y D!nald

W!rden

7When )e n!tice the imulse t! trade (ased !n h< "ear* it is usually (est

t! literally ste !ut !" the tra (y stein# !ut !" the situati!n& We needt! #et u* )alk a)ay "r!m the c!muter and tele%isi!n* take a )alk* #et

a diet s!da* #! !utside and )ater the lants* !r d! anythin# else that )ill

m!%e us !ut !" the "earanic m!de& D!n1t return t! the c!muter until

y!u ha%e mana#ed t! achie%e s!me em!ti!nal c!ntr!l !%er y!ur

"earanic reacti!n& 6" y!u can1t #et a #ri !n y!ur "ear* then d!n1t c!me

(ack that day& M!st likely y!u )ill $nd that e%en i" y!u kee thinkin#

a(!ut the misera(le market c!nditi!ns )hile y!u )ater the lanters*

simly #ettin# a)ay "r!m the key(!ard and m!nit!r is en!u#h t! make a

di4erence& 6t rem!%es the demand t! take acti!n and #i%es y!u themental sace t! #ain ersecti%e and let #! !" y!ur knee 3erk sell

reacti!n&7 . The Discilined Online 6n%est!r* (y Ste%en ,endlin* 'h&D&

7O" c!urse m!st in%est!rs en3!y the r!cess !" amassin# r!$ts* the

satis"acti!n !" adet tradin#* !r simly !ut)ittin# the cr!)d& -ut it is n!t

3ust the !utc!me that is im!rtant* it is als! the r!cess& The tensi!n that

acc!manies (ein# in the market is an inte#ral art !" the !%erall

exerience& F!r r!$t )ith!ut risk* !r l!ss )ith!ut care drains much !"

the leasure !ut !" the in%estin# r!cess&7 . The Mind !" the Markets* (y

F& 8& 0hu



7When )e n!tice the imulse t! trade (ased !n h< "ear* it is usually (est

t! literally ste !ut !" the tra (y stein# !ut !" the situati!n& We need

t! #et u* )alk a)ay "r!m the c!muter and tele%isi!n* take a )alk* #et

a diet s!da* #! !utside and )ater the lants* !r d! anythin# else that )ill

m!%e us !ut !" the "earanic m!de& D!n1t return t! the c!muter untily!u ha%e mana#ed t! achie%e s!me em!ti!nal c!ntr!l !%er y!ur

"earanic reacti!n& 6" y!u can1t #et a #ri !n y!ur "ear* then d!n1t c!me

(ack that day& M!st likely y!u )ill $nd that e%en i" y!u kee thinkin#

a(!ut the misera(le market c!nditi!ns )hile y!u )ater the lanters*

simly #ettin# a)ay "r!m the key(!ard and m!nit!r is en!u#h t! make a

di4erence& 6t rem!%es the demand t! take acti!n and #i%es y!u the

mental sace t! #ain ersecti%e and let #! !" y!ur knee 3erk sell

reacti!n&7 . The Discilined Online 6n%est!r* (y Ste%en ,endlin* 'h&D&

76n times !" #reatest ec!n!mic stress* the )!rst thin# y!u can d! as an

in%est!r is t! anic& Reacti!ns t! situati!ns that are (!rn !" "ear are

rarely )ise !r hel"ul& 'erhas y!u didn1t sell (e"!re e%ery!ne else (e#an

t!* and y!u1re in a market slum& There y!u are* "acin# a hu#e l!ss* all in

!ne day& @!ur $rst instinct may %ery )ell (e t! call y!ur (r!ker and sell as

2uickly as y!u can& This is a classic anic reacti!n& D!n1t all!) y!ursel" t!

#i%e int! that initial anic attackB d!n1t rush t! sell the next day& The time

t! sell is (e"!re the crash* n!t a"ter& 6nstead* take a dee (reath* and

study y!ur !rt"!li!& 6" y!u didn1t !)n these st!cks n!)* )!uld y!u (uythem a"ter the market crashC 0hances are that y!u )!uldB they1d (e

e%en cheaer& Sellin# them )!uldn1t (e a c!rrecti!n* (ut a reacti!n&7 .

Siritual 6n%estments (y =ary M!!re

STRESS 'RODU06:= E5E:TS

7Success"ul tradin# re2uires the mana#ement !" y!ur stress res!nse*

)hich is tri##ered )hen y!u (elie%e y!u may n!t (e a(le t! c!e )ith a

ercei%ed !r real threat t! y!ur mental* hysical* !r em!ti!nal )ell.

(ein#& 6t1s %ital t! kee m!nit!rin# y!ur stress le%els and make sure they

are l!)& One ar!ach is t! c!unt u the num(er !" li"e e%ents that ha%e

r!duced stress in the ast six m!nths& ,!) stress"ul has y!ur li"e (een

in the ast six m!nthsC ,a%e y!u exerienced se%eral ma3!r li"e

transiti!nsC Success"ul c!in# there"!re re2uires a)areness !" all

!tential s!urces !" stress* s! )e can all!cate !ur c!in# res!urces m!st

ec!n!mically&7 . S!urce Unkn!)n



SU00ESS

7Success is #ettin# )hat y!u )ant& ,ainess is )antin# )hat y!u #et&7 .

Dale 0arne#ie

TRA0K RE0ORDS

7-e scetical !" track rec!rds& There are s! many "unds and "!recasts

that at any !int in time* s!me!ne has t! ha%e (een ri#ht& With en!u#h

m!nkeys in the r!!m* !ne !" them )ill tye !ut ,amlet& -ut it d!esn1t

mean the same m!nkey )ill then #! !n t! )rite Mac(eth&7. 'aul Ormer!d

TRAD6:=

7-e"!re y!u enter any trade* think that y!u )ill ha%e t! exlain this trade

t! the )!rld in a case study "!rmat& Trade as i" the )!rld )as standin#

(ehind y!ur sh!ulders&7 . The St!ck Trader* (y T!ny O/

7Achie%e success in any area !" li"e (y identi"yin# the !timum strate#ies

and reeatin# them until they (ec!me ha(its&7 . 0harles =i%ens

A TRADERS1 QUA96T6ES76 hate )eekends (ecause there is n! st!ck market&7. Rene Ri%kin

7The e!le that 6 kn!) )h! are the m!st success"ul at tradin# are

assi!nate a(!ut it& They "ul$l )hat 6 think is the $rst re2uirement

de%el!in# intuiti!ns a(!ut s!methin# they care a(!ut deely* in this

case tradin#& They are the e!le )h! study years !" charts* !r

c!mm!dity annuals;& They de%el! a dee kn!)led#e !" )hate%er "!rm

!" analysis they use& Out !" that assi!n and kn!)led#e* their tradin#

ideas* insi#hts* and intuiti!ns emer#e&7 . 0harles Faulkner7The di4erence (et)een a success"ul ers!n and !thers is n!t a lack !"

stren#th* n!t a lack !" kn!)led#e* (ut rather a lack !" )ill&7 . 5ince

9!m(ardi

7The class !" th!se )h! ha%e the a(ility t! think their !)n th!u#hts is

searated (y an un(rid#ea(le #ul" "r!m the class !" th!se )h! cann!t&7.

9ud)i# %!n Mises

7M!st !" the 6%y 9ea#ue #uys 6 kn!) are used t! (ein# ri#ht* they #et

%ery unc!m"!rta(le dealin# )ith uncertainty )hen there is n! ri#ht

ans)er& Their e#!s !"ten make them s! a"raid !" (ein# )r!n#* that



they1re una(le t! make #!!d (ets& They aren1t c!m"!rta(le )ith the idea

!" risk* (ecause they d!n1t kn!) h!) t! assess it !r measure it& They

ha%e (een tau#ht t! a(s!r( kn!)led#e* n!t )hat t! d! )ith it&7. 9arry

,ite

76t is im!ssi(le "!r a man t! learn )hat he thinks he already kn!)s&7 .Eictetus

76t isn1t that they can1t see the s!luti!n& 6t is that they can1t see the

r!(lem&7 . =K 0hestert!n

76 )ant t! (e a(le t! exlain my mistakes& This means 6 d! !nly the

thin#s 6 c!mletely understand&7 . Warren -u4ett

76t al)ays ama/es me h!) "e) in%est!rs and s!metimes* "und

mana#ers can articulate their in%estment hil!s!hy& With!ut an

in%estin# "rame)!rk* a )ay !" thinkin# a(!ut the )!rld* y!u1re #!in# t!

ha%e a %ery t!u#h time d!in# )ell in the market& 6" y!u d! y!ur

h!me)!rk* stay atient* and insulate y!ursel" "r!m !ular !ini!n*

y!u1re likely t! d! )ell& 6t1s )hen y!u #et "rustrated* m!%e !utside y!ur

circle !" c!metence* and start de%iatin# "r!m y!ur ers!nal in%estment

hil!s!hy that y!u1re likely t! #et int! tr!u(le&7. 'at D!rsey

7S!me e!le seem t! like t! l!se* s! they )in (y l!sin# m!ney&7. Ed

Seyk!ta

7We kn!) !" traders )h!se u(lic ima#e l!!ks ristine* (ut their

ers!nal li%es* mental health and (alance are in such dire strai ts theyare n!t caa(le !" any tye !" real success !r achie%ement& They mi#ht

#et the num(ers (ut their r!(lematic mental health kees them (ack&

-!tt!m line they ne%er #et t! )here they )ant t! #!& 9i"e (ec!mes

!ne (i# rati!nalisati!n >!r excuses? "!r them&7. Michael 0!%el

76 )as lucky t! ha%e the ri#ht her!es& Tell me )h! y!ur her!es are and 61ll

tell y!u h!) y!u1ll turn !ut& The 2ualities !" th!se y!u admire are the

traits y!u* )ith a little ractice* can make y!ur !)n* and that i" ractised

)ill (ec!me ha(it."!rmin#&7. Warren -u4ett

TRAD6:= 0OM'ET6T65E9@

7Tradin# is a c!metiti%e #ame* (ut remem(er )h!m y!u are c!metin#

a#ainst . y!ursel"&7 . The Tradin# Athlete* (y Shane Murhy and D!u#

,irschh!rn

TRADERS 5ERSUS -OOK6ES



7There )ill (e cheatin# in any acti%ity in%!l%in# (i# m!ney* (ut

c!mared )ith the st!ck market* h!rse racin# is h!nest and )ell.

re#ulated& 6" y!u added u the d!llar t!tal !" all the larceny in the hist!ry

!" h!rse racin#* it )!uld (e a tiny "racti!n !" the m!ney de"rauded "r!m

the u(lic in the Enr!n scandal al!ne&7 . Andy -eyer VThin#t!n '!st7As a (!!kie 6 learnt ; h!) e!le (eha%e* h!) they 3ud#e )innin#

%ersus l!sin#* the need "!r h!e& M!st e!le d! n!t understand the

nature !" !dds* h!) s!me thin#s are multilicati%e in nature as an

additi%e& 6 mean* "!r examle* i" y!u had t! decide !n a c!many and ;

there )ere G di4erent asects !" that c!many that y!u had t! think

a(!ut and y!u c!uld (e L c!rrect !n e%ery !ne !" th!se asects* y!u

still ha%e a(!ut a chance* r!(a(ly less than * r!(a(ly

chance& S! 6 learned a(!ut !dds& 6 learned a(!ut e!le and their h!es

and dreams and drud#ery !" )!rk and the er%erse sych!l!#y that

makes e!le make stuid decisi!ns& 6 )as lucky in that 6 learned at a

y!un# a#e* (ut it )as time t! m!%e !nB )hen 6 )ent (ack t! hi#h sch!!l*

it )as sad (ecause it t!!k a(!ut G years "!r me t! #et (ack t! )hat 6

)as makin# )hen 6 )as a(!ut G years !ld&7 . -ruce -erk!)it/* "!under

!" the Fairh!lme Fund&

7,!rse handicaers "all int! t)! ma3!r cate#!ries seed and class& The

seed d!ester )ants l!ts !" $#ures ,e !res !%er the "!rm sheet t!

determine )hich h!rse !sted the "astest time in recent races* ad3usted"!r track c!nditi!ns* )ei#ht carried* etc& The class handicaer sc!rns

num(ers& 7Tell me a(!ut (l!!dlines and the 2uality !" ast !!siti!n*7

he says& These di4erin# d!ctrines ha%e their arallel in the in%estment

)!rld* (et)een analysts emhasisin# 2uantitati%e "act!rs and th!se )h!

"a%!ur a 2ualitati%e ar!ach& The 2uantitati%e analyst says* 79et1s (uy

the cheaest st!ck as measured (y s!me c!m(inati!n !" rice earnin#s

rati!* (!!k %alue* yield* etc& The 2ualitati%e analyst says* 7-uy the (est

c!many* the (est mana#ement and d!n1t )!rry t!! much a(!ut the

num(ers& ,aily* there1s m!re than !ne )ay t! #et t! $nancial hea%en&Skilled and insi#ht"ul ractiti!ners !" either ersuasi!n )ill (e re)arded&7

. Warren -u4ett* -erkshire ,atha)ay&

7This >)e(?site is dedicated t! teachin# unters h!) t! increase their

!dds su(stantially (y (ettin# !n h!rses that are exected t! c!me in

last& This strate#y )!rks much like sh!rtin# st!cks ;& W!uldn1t it (e nice

t! lace a (et.t!.l!se )a#er !n a h!rse that is n!t exected t! c!me in

$rst* and )in nearly the same am!unt !" ri/e m!ney as the )innin#

h!rseC7 -!!kMakersSecrets&c!m&



7S!rts (ettin# and $nancial markets are (!th e+cient en!u#h that y!u

ha%e t! d! y!ur h!me)!rk* and l!ts !" it ; it1s n!t a crime t! ha%e m!re

in"!rmati!n than the #uy !n the !ther side !" the (ettrade ; it1s 3ust

that i" =!ldman is y!ur (!!kmaker* d!n1t (e surrised i" y!u end u

l!sin#&7 . Felix Salm!n* Reuters&

TRE:DS

7Trends test the !int !" last su!rtresistance& Enter here e%en i" it

hurts&7 . Alan Farley

TWO RU9ES7T)! rules G& 'reser%e the rincial <& When in d!u(t* see Rule XG&7 .

Warren -u4ett

U:0ERTA6:T@

7The )!rld is n!t #r!)in# )!rse and it is n!t #r!)in# (etter..it is 3ust

turnin# ar!und as usual&7. Finley 'eter Dunne

7One !" the #reatest dan#ers that traders "ace is uncertainty a(!ut thear!ach they are takin#* and )hether !r n!t it1s #!in# t! c!ntinue

)!rkin#& 6 $nd* in%aria(ly* that 3ust )hen e!le )rite s!methin# !4 is

the exact )r!n# time t! st! usin# it&7 .0urtis Faith

7A timid 2uesti!n )ill al)ays recei%e a c!n$dent ans)er&7. 9!rd Darlin#

7My her!es are the !nes )h! sur%i%ed d!in# it )r!n#* )h! made

mistakes* (ut rec!%ered "r!m them&7. -!n!

7Sit next t! a retty #irl "!r an h!ur* it seems like a minute& Sit !n a red.

h!t st!%e "!r a minute* it seems like an h!ur& That1s relati%ity&7. Al(ert

Einstein

70!nsider the !sta#e stam* my s!n& 6t secures success thr!u#h its

a(ility t! stick t! !ne thin# till it #ets there&7 . 8!sh -illin#s

76" y!u1re layin# a !ker #ame and y!u l!!k ar!und the ta(le and can1t

tell )h! the sucker is* it1s y!u&7 . 'aul :e)man

76t is sad t! #r!) !ld (ut nice t! rien&7. -ri#itte -ard!t

7Seek n!t #reatness* (ut seek truth and y!u )ill $nd (!th&7 . ,!race

Mann

7@!u can measure a man1s character (y the ch!ices he makes underressure&7 . Winst!n 0hurchill



76 d!n1t syche mysel" u& 6 syche mysel" d!)n& 6 think clearer )hen 61m

n!t syched u&7. Ste%e 0authen

7@!u #r!) u the $rst day y!u ha%e y!ur $rst #!!d lau#h at y!ursel"&7 .

Ethel -arrym!re

WORK

76 ne%er remem(er "eelin# tired (y )!rk* th!u#h idleness exhausts me

c!mletely7 . Sherl!ck ,!lmes

WORR@

7Remem(er* t!day is the t!m!rr!) y!u )!rried a(!ut yesterday&7 . Dale

0arne#ie&

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