Sometimes people say,' One day you are going to look back at this and laugh. ' My question is:' Why wait?
It's much easier to learn what you should do in trading than to do it. Good systems tend to violate normal human tendencies.
The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance.
People want to buy cheap and sell dear; this by itself makes them countertrend. But the notion of cheapness or dearness must be anchored to something. People tend to view the prices they’re used to as normal and prices removed from these levels as aberrant. This perpective leads people to trade counter to an emerging trend on the assumption that prices will eventually return to “normal”. Therein lies the path to disaster.
In many ways, large profits are even more insidious than large losses in terms of emotional destabilization. I think it's important not to be emotionally attached to large profits. I've certainly made some of my worst trades after long periods of winning. When you're on a big winning streak, there's a temptation to think that you're doing something special, which will allow you to continue to propel yourself upward. You start to think that you can afford to make shoddy decisions. You can imagine what happens next. As a general rule, losses make you strong and profits make you weak.
I haven't seen much correlation between good trading and intelligence. Some outstanding traders are quite intelligent, but a few aren't. Many outstanding intelligent people are horrible traders. Average intelligence is enough. Beyond that, emotional makeup is more important.
Amateurs go broke taking large losses, professionals go broke taking small profits.
Financial markets need to become less, not more, efficient.
When I put out to sea, I do not offer advice to the skipper about the management of the ship.
Sorrow is better than fear. Fear is a journey,a terrible journey, but sorrow is at least an arrival. When the storm threatens, a man is afraid for his house. But when the house is destroyed, there is something to do. About a storm he can do nothing, but he can rebuild a house.
People get mad at me very easily. The magnitude of your anger toward me is the measure of how much you know you are doing wrong.