Thought of the Day (November 25, 2009)

Having the will to execute means having the capability or power to carry through on a plan of action designed to achieve a specific goal.

It means having the ability to decide. The word decide comes from Latin roots that mean “to cut off.” When you really make a decision, your mind has concluded that no other alternative is either desirable or possible. When you achieve this state of mind, carring through your plan becomes less a matter of choice and more a matter of necessity.

The plan itself becomes a value, and if integrated into your subconscious, can actually be supported by your emotions. In this way, practicing emotional discipline not only enhances your ability to act, but also reduces the level and frequency of emotional conflict– it becomes a source of consistency in thought, actions, and feelings.

– Victor Sperandeo, Trader Vic — Methods of a Wall Street Master

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Tradecraft – First Thinks First

JUST NINE DAYS after the most horrific attack on the U.S. since Pearl Harbor, President Bush posed a crisp challenge to the world’s 190 countries and six billion residents. “Every nation, in every region, now has a decision to make,” he said. “Either you are with us, or you are with the terrorists.”

And while the president’s point was to stress the vigilance with which the U.S. would fight the war on terrorism, the truth is that he committed a common logical fallacy that plagues even the smartest individuals, from politicians to portfolio managers.

His rhetoric was a perfect example of what logicians refer to as a “false dilemma,” or fallacy of distraction. By limiting the number of options, we forget the reality that, truth be told, there are actually more than two choices in this highly complex scenario. And whether you are coping with terrorism or Tyco (TYC), that’s usually the case.

This sort of black-or-white thinking, a topic we first touched on a few weeks back, is just one of a handful of common trading traps that can affect your performance. (more…)

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Thought of the Day (November 24, 2009)

Almost every successful investor that I have encountered has realized that success in the markets comes from internal control. This is a radical change for most investors. Internal control is not that difficult to achieve, but it is difficult for most people to realize how important it is. For example, most investors believe that markets are living entities that create victims. If you believe that statement, then it is true for you. But markets do not create victims; investors turn themselves into victims. Each trader controls his or her own destiny. No trader will find success without understanding this important principle at least subconsciously.

– Van Tharp, Trade Your Way to Financial Freedom

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Thought of the Day (November 23, 2009)

Although the cheetah is the fastest animal in the world and can catch any animal on the plain, it will wait until it is absolutely sure it can catch its prey. It may hide in the bush for a week, waiting for just the right moment. It will wait for a baby antelope, and not just any baby antelope, but preferably one that is also sick or lame. Only then, when there is no chance it can lose its prey, does it attack. That, to me, is the epitome of professional trading.

– Mark Weinstein, Market Wizards by Jack Schwager

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