Rules from the Masters

Hi Pranay,

Yes,my friend,there is so much knowledge here that you actually should read each and every thread.

But rating it is my way of showing my extreme appreciation of some superb stuff.

Saint
ps:there seems to be always something or other pending,my friend.....for now ,am back.

Thanks for all the kind words guys! Will keep posting as and when I come across more words of wisdom!

Hi Saint, thanks for the rating! Anyway, can the moderator, or I, move this thread to the Wisdom section?

Next: Todd Harrison
Todd Harrison is the founder and CEO of Minyanville.

I've tripped plenty through the years, the types of missteps that almost cost me my livelihood. But I preserved, climbed the ladder and morphed those mistakes into valuable lessons. First as a vice-president at Morgan Stanley, then as a managing director at the Galleon Group and, finally, as president of Cramer Berkowitz. My approach wasn't always constant but, in the end, certain rules allowed me to stay in the game.

These are those rules.

1. Respect the price action but never defer to it. The action (or "eyes") is a valuable tool when trading but if you defer to the flickering ticks, stocks would be "better" up and "worse" down and that's a losing proposition. This is a particularly pertinent point as headlines of new highs serve as sexy sirens for those on the sidelines.

2. Discipline trumps conviction. No matter how strongly you feel on a given position, you must defer to the principles of discipline when trading. Always try to define your risk and, above all, never believe that you're smarter than the market.

3. Opportunities are made up easier than losses. It's not necessary to play every move, it's only necessary to have a high winning percentage on the trades you choose to make. Sometimes the ability not to trade is as important as trading ability.

4. Emotion is the enemy when trading. Emotional decisions always have a way of coming back to haunt you. If you're personally attached to a position, your decision making process will be flawed. It's that simple.

5. Zig when others zag. Sell hope, buy despair and take the other side of emotional disconnects in the context of controlled risk. If you can't find the sheep in the herd, chances are that you're it.

6. Adapt your style to the market At various junctures, different investment approaches are warranted and applying the right methodology is half the battle. Identify your time horizon and employ a risk profile that allows the market to work for you.

7. Maximize your reward relative to your risk If you're patient and pick your spots, edges will emerge that provide an advantageous risk/reward. Proactive patience is a virtue.

8. Perception is reality in the marketplace. Identifying the prevalent psychology is a necessary process when trading. It's not "what is," it's what's perceived to be that dictates supply and demand.

9. When unsure, trade "in between" Your risk profile should always be an extension of your thought process. If you're unsure, trade smaller, or paper trade, until your identify your comfort zone. Trading "feel" is cyclical and any professional worth his or her salt must endure slumps.

10. Don't let your bad trades turn into investments. Rationalization has no place in trading. If you put a position on for a catalyst and it passes, take the risk off win or lose.

Hi Ivan,

For me this is the best thread in the entire forum. Rules good to read but difficult to implement.

For me u are not less than a master...

Keep rules flowing.

Regards,
a$h,investor

Excellent work,Ivan!!

Thanks Phoenix!

Done.....probably a year and a half too late...Ivan,I know you are reading this.When you do get the time,do keep this thread alive.

All the best!
Saint

__________________
"You cannot change the direction of the wind,but you CAN adjust the sail..."

Great job Ivan I thoroughly enjoyed reading and thanx to Saint for reviving this true gem

Most welcome,Marcus!

Saint

__________________
"You cannot change the direction of the wind,but you CAN adjust the sail..."