The Mind of a Stock Trader
The famous trader, Nicolas Darvas, fell into the same trap that besets most burgeoning self-directed investors. Like most he became overconfident after his initial success:
“In a few days of trading, I threw overboard everything I had learned… I did everything I trained myself not to do. I talked to brokers. I listened to rumors. I was never off the ticker. It was as if the get-rich-quick demon had got hold of me. I completely lost a clear perspective I had so carefully built up… Step by step I led myself along a path where I began to lose my skill."
Most of us who trade do so because we think we have an advantage, and usually we do. The edge we develop (or that we are taught) is usually significant and viable. Our trading system and investment techniques have been thoroughly thought out. As we review our trades, our entries and exits, we can usually see we are within inches of the Investors’ Holy Grail.
Investment success is just slightly beyond our grasp. We say to ourselves "with just a little more skill I am finally going to make it - - I will be where I have always dreamed I could be".
So what's missing?
Darvas said "as I followed the crowd I also started to act like this. Instead of being a lone wolf, I became a confused, excited lamb milling around with others, waiting to be clipped. It was impossible for me to say "no" when everybody around me was saying "yes". I got scared when they got scared. I became hopeful when they were hopeful…" I became a complete amateur. The careful system I had built up collapsed around me."
What separates the amateur from the superstar?
Perhaps the most famous trader of all time, Jesse Livermore, the Legend of Wall Street, speaking to would-be speculators stressed "let me warn you that the fruits of your success will be in direct ratio to the honesty and sincerity of your own effort in keeping your own records, doing your own thinking, and reaching your own conclusions." You cannot delegate or relegate these tasks to an assistant, an executive, an adviser, commentator or a broker, any more than you can read a book on "how to keep fit" and leave the physical exercising to another.
Need more info: SEE: Express-stock-investing.com
We build our own judgment, become our own judgment. And our judgment must learn to be in lockstep with the market itself. We need to clearly see and know whether we are in a bull market, bear market, or a defined trading range. We need to hone our judgment "until the action of the market itself confirms our opinion". Markets are never wrong but our opinions and egos most often are. Pride always comes before our fall.
Superstar investors have the uncanny knack to make real money in trading right from the first few moments of a trade. Livermore said of the successful speculator: "commitments in a stock or commodity show a profit right from the start". Is that how our initial positions look?
Yes, I know.
The problem with our trading mindset is our emotional conditioning when it comes to "HOPEFUL" and "FEARFUL" impulses. When we inject hope and fear into the business of investing, trading and speculation, we are faced with a very formidable hazard. We are programmed in the reverse of what is appropriate. Our feelings of hope and fear are put into reverse warring with what logic, mind, system and judgment dictate. We become confused so that the trade fails.
Jesse Livermore explains the investors’ human nature this way:
“All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope - - that is why the numerical formations and patterns recur on a constant basis."
By recognizing and acting upon those patterns and formations, Livermore made his amazing fortune.
Why was he the Legend of Wall Street?
Because he developed his own judgment and knowledge in secretive silence. He was a loner and necessarily so. He learned the power of silence and the power of keeping his actions secret. He told his confidants and sons that the only time he seriously lost money was when he listened to other people. Breaking his code of silence always hurt him.
The story was no different for Nicolas Darvas, the man who in a breathtakingly short time, made $2 million in the stock market. He brooded over what became of the skill that had served him so well in his early trading:
"Haunted by never ending losses, terrified by the confusion, wracked by rumors, I got so I could not even see the figures. My coordination broke down.... My mind had become blurred. This last phase really frightened me. I felt like a drunk who loses touch with reality and cannot understand why. At the end of the few disastrous weeks, I sat down soberly to examine the reasons why this should have happened to me."
Darvas knew there was no easy solution to his problem and for a long time he was baffled. When the answer finally came it was extraordinarily surprising in its simplicity:
"MY EARS WERE MY ENEMY! It dawned on me like a revelation that when I was traveling abroad I had been able to assess the market, or rather the few stocks in which I was interested, calmly, neutrally, without interruption or rumor, completely without emotion and ego. I operated simply on the basis of my daily telegram [the price action of the stocks he followed], which gave me my perspective. It showed me the way my stocks were behaving. There were no other influences, because I did not see or hear anything else."
The 10% of the self-directed investors who trade successfully in the markets are those who develop and act upon their own judgment, without influence.
The moral of the story?
Develop our own judgment. Become our own judgment. Live our own judgment, without hesitation or doubt. Lone-wolf it.
Success is in our character- - true, straight and right character - - without a speck of compromise in it.
We may have knowledge, we may have skill, and we may have a definite edge. All of that is wholly insufficient, and of itself alone, is actually counterproductive.
Humble, quiet character - - unhindered by inappropriate emotion but strengthened by good judgment - - that is the stuff of true trading success.
So do you want to be in the 10% or in the 90%? It's your choice. Mediocrity or millions?
By Trader Cool
The famous trader, Nicolas Darvas, fell into the same trap that besets most burgeoning self-directed investors. Like most he became overconfident after his initial success:
“In a few days of trading, I threw overboard everything I had learned… I did everything I trained myself not to do. I talked to brokers. I listened to rumors. I was never off the ticker. It was as if the get-rich-quick demon had got hold of me. I completely lost a clear perspective I had so carefully built up… Step by step I led myself along a path where I began to lose my skill."
Most of us who trade do so because we think we have an advantage, and usually we do. The edge we develop (or that we are taught) is usually significant and viable. Our trading system and investment techniques have been thoroughly thought out. As we review our trades, our entries and exits, we can usually see we are within inches of the Investors’ Holy Grail.
Investment success is just slightly beyond our grasp. We say to ourselves "with just a little more skill I am finally going to make it - - I will be where I have always dreamed I could be".
So what's missing?
Darvas said "as I followed the crowd I also started to act like this. Instead of being a lone wolf, I became a confused, excited lamb milling around with others, waiting to be clipped. It was impossible for me to say "no" when everybody around me was saying "yes". I got scared when they got scared. I became hopeful when they were hopeful…" I became a complete amateur. The careful system I had built up collapsed around me."
What separates the amateur from the superstar?
Perhaps the most famous trader of all time, Jesse Livermore, the Legend of Wall Street, speaking to would-be speculators stressed "let me warn you that the fruits of your success will be in direct ratio to the honesty and sincerity of your own effort in keeping your own records, doing your own thinking, and reaching your own conclusions." You cannot delegate or relegate these tasks to an assistant, an executive, an adviser, commentator or a broker, any more than you can read a book on "how to keep fit" and leave the physical exercising to another.
Need more info: SEE: Express-stock-investing.com
We build our own judgment, become our own judgment. And our judgment must learn to be in lockstep with the market itself. We need to clearly see and know whether we are in a bull market, bear market, or a defined trading range. We need to hone our judgment "until the action of the market itself confirms our opinion". Markets are never wrong but our opinions and egos most often are. Pride always comes before our fall.
Superstar investors have the uncanny knack to make real money in trading right from the first few moments of a trade. Livermore said of the successful speculator: "commitments in a stock or commodity show a profit right from the start". Is that how our initial positions look?
Yes, I know.
The problem with our trading mindset is our emotional conditioning when it comes to "HOPEFUL" and "FEARFUL" impulses. When we inject hope and fear into the business of investing, trading and speculation, we are faced with a very formidable hazard. We are programmed in the reverse of what is appropriate. Our feelings of hope and fear are put into reverse warring with what logic, mind, system and judgment dictate. We become confused so that the trade fails.
Jesse Livermore explains the investors’ human nature this way:
“All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope - - that is why the numerical formations and patterns recur on a constant basis."
By recognizing and acting upon those patterns and formations, Livermore made his amazing fortune.
Why was he the Legend of Wall Street?
Because he developed his own judgment and knowledge in secretive silence. He was a loner and necessarily so. He learned the power of silence and the power of keeping his actions secret. He told his confidants and sons that the only time he seriously lost money was when he listened to other people. Breaking his code of silence always hurt him.
The story was no different for Nicolas Darvas, the man who in a breathtakingly short time, made $2 million in the stock market. He brooded over what became of the skill that had served him so well in his early trading:
"Haunted by never ending losses, terrified by the confusion, wracked by rumors, I got so I could not even see the figures. My coordination broke down.... My mind had become blurred. This last phase really frightened me. I felt like a drunk who loses touch with reality and cannot understand why. At the end of the few disastrous weeks, I sat down soberly to examine the reasons why this should have happened to me."
Darvas knew there was no easy solution to his problem and for a long time he was baffled. When the answer finally came it was extraordinarily surprising in its simplicity:
"MY EARS WERE MY ENEMY! It dawned on me like a revelation that when I was traveling abroad I had been able to assess the market, or rather the few stocks in which I was interested, calmly, neutrally, without interruption or rumor, completely without emotion and ego. I operated simply on the basis of my daily telegram [the price action of the stocks he followed], which gave me my perspective. It showed me the way my stocks were behaving. There were no other influences, because I did not see or hear anything else."
The 10% of the self-directed investors who trade successfully in the markets are those who develop and act upon their own judgment, without influence.
The moral of the story?
Develop our own judgment. Become our own judgment. Live our own judgment, without hesitation or doubt. Lone-wolf it.
Success is in our character- - true, straight and right character - - without a speck of compromise in it.
We may have knowledge, we may have skill, and we may have a definite edge. All of that is wholly insufficient, and of itself alone, is actually counterproductive.
Humble, quiet character - - unhindered by inappropriate emotion but strengthened by good judgment - - that is the stuff of true trading success.
So do you want to be in the 10% or in the 90%? It's your choice. Mediocrity or millions?
By Trader Cool
