The extraordinary market times that we are living in today got me thinking about some of the things I've learned over the years. Social media offers some amazing benefits that didn't exist when I first got my beak wet trading Phelps Dodge and Nortel with my E-trade account in 2003.
In one sense we have more information at our fingertips than ever before. However, in another sense we have far more temptation at our fingertips than anyone ever dreamed possible. All of this information, temptation, instant gratification, FOMO, FUD, etc. got me thinking and here is what I came up with.
Some things I have learned through many failures, successes, highs, lows, and everything in between over more than 40,000 hours trading markets:
- Everything, and I mean everything, is clear in hindsight.
- The market is always there to tempt us to do something, but the best actions in the market occur when we let the trade(s) come to us.
- The first loss is usually the best loss.
- Position sizing and bankroll management are more important than any technical/fundamental analysis OR trade setups. If you can't manage your risk, you won't have longevity in this game.
- Developing a process and regular trading habits was what allowed me to finally say "i'm a professional, I can win consistently at this game". By habits I don't just mean scanning through charts or doing homework on the weekend, I mean the details of what one does from the time they wake up to when they shut it down in the afternoon/evening.
- Every professional starts as an amateur. It's how they work on their craft and pick themselves up from setbacks that makes all the difference. In chess, every grandmaster loses thousands of games before they become so good that losing a game happens only a few times a year. It doesn't happen overnight and it's the rare few that have the perseverance, talent, and commitment to hone their craft to the point of achieving excellence on a consistent basis.
- The market has the unique ability to humble anyone. The greatest traders in history (see Jesse Livermore, or Stan Druckenmiller) have suffered huge failures after seemingly reaching the pinnacle of the game.
- Whenever I feel like I can't lose, the risk of a big setback is usually the greatest.
- The best trades are also often the ones that are the easiest to 'let go of' i.e. they become profitable quickly and the temptation to sell and take profits is high.
- The best traders have the ability to 'argue with the market' for short periods of time while keeping a close eye on managing risk. They are also very quick to take a loss and move onto the next one.
- Learn to curate information intake and read content that is edifying and nurturing. Avoid negativity and toxicity like the plague. We must keep our minds clean and our thoughts efficient and clear.
- Focus less on how everyone else is doing, and focus more on what/how I'm doing. It is those who have little going for themselves that like to focus on everyone else.
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