FROM AN EXPERIENCE
Although the cheetah is the fastest animal in the world and can
catch any animal on the plains, it will wait until it is absolutely
sure it can catch it’s prey. It may hide in the bush for a week,
waiting for just the right moment. It will wait for a baby antelope,
and not just any baby antelope, but preferably also one that is sick
or lame. Only then, when there is no chance it can lose its prey,
does it attack. That, to me, is the epitome of professional trading.”
- Mark Weinstein
There was a scorpion, who wanted to cross a river,
but cannot as he could not swim.
He asked a frog to carry him across a river.
The frog was afraid of being stung, but the scorpion reassures him
that if it stung,
the frog would sink and the scorpion would drown as well.
The logic appeals to the Frog, So he then agrees;
nevertheless, in mid-river,
the scorpion stings him, dooming them both.
When asked why, the scorpion explains,
“I’m a scorpion; it’s my nature.”
To let profits run, need to keep Greed at bay,
else it will Sting in each and every trade.
How does a seasoned trader control his emotions?
He realizes that his trading performance moves in cycles.
Sometimes he is profitable and sometimes he is not.
Gaining awareness of this fact helps control his emotions.
Try and realize that if you have a big winning period that you
shouldn’t get overly excited because, most likely, you’ll have
a flat or losing period just around the corner.
No style of trading makes money all the time.
The odds are that after you have a big winning period,
you’ll go through a period of losing money shortly thereafter.
(to be contd)
TODAY’S TRADING STRATEGY
OF NIFTY FUTURES – MAY 30th
If stays below 5475 see slide upto 5445-35-26
Good ‘Intraday’ Support is seen @ 5418 today
Above 5475 for 15 min means hike upto 5490-5500-06
is for sure.
Intraday resistance @ 5506
Range bound today between 5426 and 5506
- All these levels are appropriate only in a
normal opening
What if 5426 or 5506 crossed..?
Subscribe us for more details and
exact trading decisions
THE NEED FOR INDEPENDENCE
You need to do your
own thinking.
Don’t get caught up in mass
hyste-ria.
As Ed Seykota pointed out,
by the time a story is making
the cover of the national
periodicals, the trend is probably
near an end.
Independence also means
making your own trading
decisions.
Never listen to other opinions. Even if it occasionally helps
on a trade or two, listening to others invariably seems to end up
costing you money-not to mention confusing your own market
view. As Michael Marcus stated in Market Wizards,
“You need to follow your own light. If you combine two traders,
you will get the worst of each.”
A related personal anecdote concerns another trader I interviewed in Market Wizards. Although he could trade better than I if he were blindfolded and placed in a trunk at the bottom of a pool, he still was interested in my view of the markets. One day he called and asked, “What do you think of the yen?”The yen was one of the few markets about which I had a strong opinion at the time. It had formed a particular chart pattern that made me very bearish.
“I think the yen is going straight down, and I’m short,” I replied.
He preceded to give me fifty-one reasons why the yen was oversold and due for a rally. After he hung up, I thought: “I’m leaving on a busi-ness trip tomorrow. My trading has not been going very well during the last few weeks. The short yen trade is one of the only positions in my account. Do I really want to fade one of the world’s best traders given these considerations?” I decided to close out the trade.
By the time I returned from my trip several days later, the yen had fallen 150 points. As luck would have it, that afternoon the same trader called. When the conversation rolled around to the yen, I couldn’t resist asking, “By the way, are you still long the yen?”
“Oh no,” he replied, “I’m short.”
The point is not that this trader was trying to mislead me. On the contrary, he firmly believed each market opinion at the time he expressed it. However, his timing was good enough so that he probably made money on both sides of the trade. In contrast, I ended up with nothing, even though I had the original move pegged exactly right. The moral is that even advice from a much better trader can lead to detri-mental results.
JESSE LIVERMORE's INTERVIEW (UNPUBLISHED)
What follows is a never before
published “interview”
with Jesse Livermore.
Conducted by Edwin Lefevre,
dated circa 1922, this “interview”
dated circa 1922, this “interview”
reveals great insights into the
mind of the famous trader.
mind of the famous trader.
As we will see, the wisdom
imparted here could change
our entire
imparted here could change
our entire
perspective on the speculative
game we love and enjoy.
game we love and enjoy.
It might even change our lives.
I took the liberty of editing it
due to its length.
I took the liberty of editing it
due to its length.
Lefevre: Hello Mr Livermore. Thank you for taking the time to
conduct this series of interviews with me.
It is my understanding that you do not grant many interviews,
so I am honored.
Livermore: You are very welcome.
I appreciate the respect but you do not have to address me
as Mr. Jesse, or my nickname, the boy plunger, will suffice.
Lefevre: And where did you get the name boy plunger?
Livermore: It was during the early days when I was trading small
lots in the bucket shops, where the man who traded in twenty shares
at a clip was suspected of being J.P. Morgan traveling incognito.
I didn’t have a following. I kept my business to myself. As it was,
it did not take long for the bucket shops to get sore on me for
beating them. I’d walk in and plank down my margin, but they’d
look at it without making a move to grab it. They’d say nothing
doing. That is when they started calling me the boy plunger.
I had to move from shop to shop, even to the point of changing
my name.
I couldn’t put trades on without getting cheated on the quotes.
This was in Boston, so I then moved to where the real action
was, to New York. I was 21 at the time.
Lefevre: Were you making money?
Livermore: My plan of trading was sound enough and won oftener
than it lost. If I had stuck to it I’d have been right perhaps
as often as seven out of ten times. In fact, I always made
money when I was sure I was right before I began.
as often as seven out of ten times. In fact, I always made
money when I was sure I was right before I began.
What beat me was not having
brains enough to stick to my own game – that is, to play the market
only when I was satisfied that precedents favored my play.
There is a time for all things, but I didn’t know it. And that is
precisely what beats so many men in Wall Street who are very
far from being in the main sucker class.
There is the plain fool, who does the wrong
thing at all times everywhere, but there is the Wall Street fool,
who thinks he must trade all the time. No man can always have
adequate reasons for buying or selling stocks daily or sufficient
knowledge to make his. play an intelligent play. The desire for
constant action irrespective of underlying conditions is responsible
for many losses in Wall Street even among the professionals,
who feel that they must take home some money every day,
as though they were working
for regular wages. Getting sore at the market doesn’t get you
anywhere. I was only a kid and had a lot to learn.
Lefevre: Sounds like you were learning some valuable lessons.
Livermore: There is nothing like losing all you have in the world for
teaching you what not to do.
And when you know what not to do in order not to lose money,
you begin to learn what to do in order to win.
Did you get that? You begin to learn!
