I trade for the thrill of victory. This the greatest job in the world. Where else can you be alone in your home, watching your monitors, not having to fight traffic, and not having a boss! I’m constantly intrigued all day long and never bored. I can’t wait for the day to start and I’m very sad to see the day end. I just love this work so much!
– Dan Zanger
Given ample opportunity to rise during a bull market, the failure of a particular issue to move upward in gear with the averages can be warning enough in itself that something is wrong. Laggards are losers.
Speculative flings in search of “something that hasn’t moved yet” can sometimes sweep up a laggard issue or two, but by and large, the hope is that what did not happen yesterday and today will happen tomorrow– only because the market seems so marvelous– and as the bull surges on without that stock, the reality becomes progressively more urgent: a stock does not have to go down first to show that it is becoming weak. Merely not going up is, under most bullish circumstances, a sign of trouble brewing.
– Justin Mamis, When to Sell
MORE THAN A tightrope walker or an orchestra conductor, the skilled trader must balance any number of factors and moving parts. In order to make money, it’s necessary to make the right move, at the right time and in the right way. The description is deceptively simple; truth be told, putting the puzzle together is always a lot harder than it sounds.
The Right Move
There’s no crystal ball. And while I’m always quick to discount the comparatively minor importance of market prognostication, the stubborn reality is that you can’t make any money if you can’t pick a winner. The best way to find winning investments is to look for them in the right way.
Yet many players are doomed from the start. The most predictable losers are the get-rich-quick crowd, who gravitate toward the OTC Bulletin Board, Pink Sheets and super low-priced stocks. All, even the “blue chip” penny stocks I wrote about a few years back, tend to be appealing yet low-probability trades. (more…)
The length of time it takes you to master trading is totally dependent upon how long it takes to master yourself. People who excel in any activity are excellent because they have become their new beliefs and distinctions. They are not trying to be confident; they are confident. They are not trying to trade free of fear; they have no fear. The act of trying means that you are still not there.
– John Hayden, The 21 Irrefutable Truths of Trading
Emotions get in the way of making good investment decisions. For example, your desire to feel good about yourself – seeking pride – causes you to sell your winners too soon. Trying to avoid regret causes you to hold your losers too long. The consequences are that you sell the stocks that perform well and keep the stocks that perform poorly. This hurts your return and causes you to pay higher taxes.
– John Nofsinger, Investment Madness
A successful trader does not forecast the future – he monitors the market and manages his trading position.
– Alexander Elder, Trading For a Living
LEST WE FORGET, the only reason we invest in the first place is to have more money. While money isn’t all that matters, it matters. Besides health and family, our financial assets may be our most valuable and prized possessions. Given how hard most of us work for our money, it makes sense to do what we can to have a bit more of it.
We can always opine about the economy or venture a guess on the next direction for the Dow. But through bull and bear markets alike, I keep coming back to fact that real wealth isn’t built from a good stock tip but from making prudence and frugality part of the everyday routine. Considering the exceptionally uninspiring state of the U.S. stock market, I believe now is an especially smart time to take a few weeks to get the financial house in order.
The stock market is an endlessly fascinating, dynamic and downright addictive animal. Yet most people who obsess over stocks ignore the real problem: poor financial habits. And although it’s super un-sexy when compared with day trading e-Minis or writing covered calls, the truth is it’s the little things — eliminating debt, reducing expenses and saving — on which fortunes are built. I don’t care how fast your quotes are: The market is always a crapshoot. However, developing good financial discipline, and sticking with it, is a guaranteed way to boost your bottom line. (more…)
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