We lie loudest when we lie to ourselves. - By Eric Hoffer
There are many fundamental misconceptions about markets and trading. I have a natural talent for analysis. I wish I had more of a natural talent for trading, but I do not.
Essentials
- You may think that the market exists somewhere out there. Wrong. How you think of the market is unique and exists only in your head. To win you have to ensure that your version of the market is “useful” and then make use of it.
- You may think you see your version of the market clearly. Wrong. What you see is shrouded within an emotional whirlwind. The whirlwind may get a lot faster when you have a trading position in place.
- You may think that trading is an easy function involving buying low and selling high. Wrong. In fact trading is not difficult, although nor is it easy, but the emotional problems we bring with us to the market mean that few win.
The key trading "secrets" are well known - experience
In the trading environment there is no “absolute” truth.
Don’t be led by advertising copy, decide what you need and then goand get it.
There are seven simple rules to success
- Always limit your losses.
- Try to ensure that your average gain is at least 2.5 times your average loss.
- Endeavour to find an approach which gives you an edge.
- Make sure you are comfortable with your trading approach. This involves self discovery, something many shy away from. But peal away the outer layers and what is inside is often very fine indeed. The outward layers can be a bit yukky.
- Learn to let profits run.Learn to trade selectively.
- Learn to control your own self sabotage.
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