Tuesday, August 30, 2011

Great trading advice

from Douglas Hirschorn:
  • Making money is easy, keeping it is hard
  • You can have a 1000 reasons to get in a trade, but you only need 1 reason to get out
  • Focus on the process (quality of your trades), not the outcome (profits/losses)
  • Know what your edge is (what your pitch looks like) and trade only when you have edge (swing only when your pitch appears).

  • In sports, you are NOT supposed to think, "What if I mess up this shot?" In trading that is called risk management.
  •  In sports, when you miss a shot, you don't lose points. In trading, when you get a trade wrong, you lose money.
  •  In sports, the opponent adjusts to what YOU do. In trading, the market does not know or care about YOU.
  •  In sports, you focus on improving weaknesses. In trading, your strengths are your weaknesses and vice-versa.
  •  In sports, if you get poor results, you need to practice harder, put in more effort. In trading, effort is not positively correlated to improved performance.
1. Recognize when fear is present
2. Welcome it (normalize it)
3. Implement a behavior modification program (with real consequences) to prevent you from acting on it

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