Monday, May 23, 2011

Good insights for traders

from Gerald Loeb. I've lost the most money (or opportunities) not remembering:
  • Stocks are always way overvalued in a bull market and way undervalued in a bear market
  • The best stocks will always seem overpriced to the majority of investors
I've made the most money by remembering:
  • What everyone else knows is not worth knowing
  • Traders must always resist the urge and temptation to change their strategies for each and every different market cycle
  • To succeed in trading you must 1) aim high, 2) control the risks, 3) be unafraid to keep uninvested reserves and 4) be patient
  • You must always trade with the actions of the market and not simply by how you might think the market should trade
  • Knowledge through experience is one trait that separates successful stock market speculators from everyone else
  • The stock market is more an art than a science and far more complex than most people understand
I've got a bone to pick with (i.e. it depends):
  • Three basis elements should be considered when evaluating a stock – 1) quality (fundamentals, liquidity, management), 2) price, and 3) trend (the most important)
  •  Pyramid your buys – start with an initial position and then add to it only if the trade moves in your favor
  • The more experienced and successful you become, the less you should diversify
  • Always sell when you start patting yourself on the back for being smarter than the market

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