Readings: Week 7 - 13 Aug 2017

13 Aug 2017

 

Think and Grow Rich – Napoleon Hill

 

“Whatever the mind of man can conceive and believe, it can achieve.” – Napoleon Hill

 

If I had to recommend one set of tapes, it would have to be Your Right to be Rich which includes inspiring lectures by Hill himself.

 

We are handed many gifts, Hill says, many opportunities for meaning, but we can tap into them only when we connect with the guiding force that put them there. We do this by dedicating ourselves to a single purpose in life, and paying daily attention to programming our subconscious minds. This is a seminal work on the basics of personal motivation.

 

 

How much patience should a trader have with a losing trade? - Peter Brandt

 

  • My initial risk per trade seldom exceeds 70 basis points and is limited to 100 basis

  • I aggressively advance protective stops within days (sometimes hours) after entering a trade.

  • My goal is to bring a trade to as close to breakeven as possible, as quickly as possible!

The trades that have most contributed to my net trading profitability over the years have two things in common.

  • The trades worked immediately with a minimum of hesitation

  • The trades trended to my price target in a very sustained manner

 

8 Life Lessons I Learned From Becoming A Trader - Fred @lonestocktrader

 

1- Being wrong is ok. Being right or wrong is just information, a feedback you use to adjust your actions. When you are wrong, the only thing to do is to stop being wrong by taking the right action.

2- Don’t dwell on missing an opportunity. What is fantastic with trading, is that, just like in real life, there is an endless stream of great opportunities that come our way. We just have to learn how to spot them. Just like trains, if you miss one, just get ready for the next one.

3- You are 100% responsible for your results

4- Listening to the media often is a waste of time

5- What you focus on determines your results

I really discovered the importance of focus with trading. What you focus on in trading will literally determine your results.

- If you focus on being right, you’ll probably lose a lot.

- Focus too much on your recent winnings, and you will be prone to overconfidence.

- Focus too much on your recent losses, and you will be scared of taking the next entry signal and more likely to change strategy.

- Focus exclusively on trading while forgetting to analysis your past trades and results, and you will likely repeat the same mistakes over and over again.

- Focus on listening to others, the news, social media, and you will be influenced by external opinions and prone to disregard your own rules or take trades outside of your strategy.

- Focus on the money and it will be much harder to actually make money.

- Focus on the process and positive expectancy, and money will follow.

6- I don’t have to be a slave to my thoughts. By observing myself and the thoughts that cross my minds, I have more control over whether to act or not on those thoughts. This allows me to be calmer in stressful situations, where money is on the line for instance, and act in a more rational manner than I would have if I’d let my thoughts and emotional reactions take over.

7- You have to do things other won’t do in order to get things others don’t have. From my own experience, I discovered that most traders do not do thorough post-analysis of their trades and trading results. The overwhelming majority of new traders prefer very short time frames. They give too much importance the outcome of a single trade. They focus exclusively on finding a way to have a high win rate, often to the detriment of risk/reward. They watch the news and get their trading ideas from others…

8- You can succeed at anything you want. Being able to beat the odds and become consistently profitable taught me that with patience, effort, drive, persistence, confidence and adaptability, they are very few things we can’t accomplish. With those qualities, that fortunately anyone can develop, you can almost be anything you want to be. 

 

 

Three Reasons Why Investors Underperform Their Investments - Melissinos Trading

 

3 things responsible for investor underperformance:

 

1) Psychology;

2) Capital not available to invest and 3) Capital needed for other things

 

 

Non cogito, ergo sum

 

Sometimes thinking is a bad idea. Ian Leslie draws on Dylan, Djokovic and academic research to put the case for unthinking

 

This, say the experts, is caused by thinking too much. When a footballer misses a penalty or a golfer fluffs a putt, it is because they have become self-conscious. By thinking too hard, they lose the fluid physical grace required to succeed. Unthinking is the ability to apply years of learning at the crucial moment by removing your thinking self from the equation. Thinking too much can kill not just physical performance but mental inspiration

 

By allowing ourselves to listen to our (better) instincts, we can tap into a kind of compressed wisdom.

 

The psychologist Gerd Gigerenzer argues that much of our behaviour is based on deceptively sophisticated rules-of-thumb, or “heuristics”. To make good decisions in a complex world, Gigerenzer says, you have to be skilled at ignoring information. He found that a portfolio of stocks picked by people he interviewed in the street did better than those chosen by experts. The pedestrians were using the “recognition heuristic”: they picked companies they’d heard of, which was a better guide to future success than any analysis of price-earning ratios.

 

They found that those who placed high trust in their feelings made better predictions than those who didn’t. The result only applied, however, when the participants had some prior knowledge.This last point is vital. Unthinking is not the same as ignorance; you can’t unthink if you haven’t already thought.

 

 

Livewire readers' Top 20 stock calls

 

 

 

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