Jesse Livermore, the legendary trader who started from scratch and traded his way to a fortune of more than $100 million by 1929, offered traders many invaluable lessons on discipline, focus, and following the market’s trend. Livermore would admit that he ultimately had trouble following his own advice, which makes it all the more important that traders today continue to remember his lessons.
I like to keep things simple. As Albert Einstein said, “Everything should be made as simple as possible . . . but not simpler.”
With that in mind, here is a list of 12 simple rules that I have found to be the key to successful trading. If you’re not getting the results you want as a trader, you’re breaking one or more of these rules.
Rule No. 1: Follow YOUR Dreams
The dream of being a successful trader, especially someone who trades for a living, is one of those “big” dreams that naysayers love to squash. Don’t listen to these cynics. There are too many examples of people who have started with very little and made fortunes trading. You can be certain they’re glad they didn’t listen to the naysayers. On the other side of the coin, make sure that you really enjoy trading before committing to it. All the great traders I know have a true PASSION for the game of trading. If you don’t have a passion for trading, you won’t last long. [click to continue…]
Over the past seven years, I’ve been coaching stock traders from all over the world. I sort of stumbled into this career as a trading “coach.”
After updating and revising the legendary Darvas Trading System for modern market conditions, I started a small little newsletter to share my implementation with those who were interested. This service grew faster than I expected and I now teach fund managers, financial advisors, and independent traders from all over the globe. Some of these traders are beginners, some are managing small personal accounts, and some are rich enough to have stadiums named after them.
While my newsletter is a how-to guide with predetermined buy points and exit points for every stock trade that fits the strategy, I also make it a point to answer every email I receive from my readers. This is where I went beyond simply writing about the Darvas System and became more of a trading “coach”.
I love being a coach for other traders. I love teaching and interacting with ambitious individuals. I learn so much from our interactions and it helps me become a better trader in the process.
Not surprisingly, after years of doing this, I’ve started to see some common recurring problems emerge. Regardless of background or experience level, some traders will struggle with the exact same issues again and again. [click to continue…]
I spend a lot of time talking about the psychological side of trading. My recent interview in Traders Magazine focused solely on the mindset necessary for successful trading.
Why do I spend so much time and energy discussing the psychology of trading? Because the longer I’m involved in this game, the more convinced I am that having the right mindset is the most important aspect of succeeding as a trader.
Learning how to trade a proven trading system is relatively simple. The rules laid out in a quality system should dictate the vast majority of your trading decisions. A successful system, with predetermined buy points and sell points, should take the guesswork out of your trades.
Having the mental discipline to FOLLOW a proven trading system is where most people get tripped up. Trading is an emotional battle and when emotions are involved, dumb mistakes get made.
You’ve been lied to.
You’ve been told that to achieve financial success, you have to work endless hours and sacrifice a happy family life. You’ve been told that successful people got to where they are by being ruthless and/or dishonest. You’ve been told that life is unfair and success is just a matter of random luck.
In short, you’ve been told that the American Dream – the idea of going out and creating a peaceful, happy, and prosperous life – is no longer achievable.
A poll conducted by YouGov earlier this year reports that 63% of Americans now say that the American Dream is either impossible to achieve or that they are unsure whether it’s possible to achieve. That percentage of negativity is staggering to me. The poll question didn’t ask if the American Dream was unlikely or difficult, but whether it was IMPOSSIBLE for most people to achieve. The majority of respondents said it was impossible rather than possible.
I think people with this pessimistic viewpoint have it all wrong. I believe the American Dream is just as achievable as it ever was – even more so, actually, thanks to the increased opportunities given to us by new technologies. [click to continue…]
If you read books about how to achieve your goals in life, you’ve probably come across what is known as “The Success Equation.”
The Success Equation is this: E + R = O
The E stands for Event, the R stands for Response, and the O stands for Outcome.
Event + Response = Outcome
Accepting this equation forces you to take personal responsibility for where you are in life. It forces you to accept the fact that while you don’t control the events that occur around you, you DO control your responses to those events. And when you control how you respond to an event, you take control of the outcomes in your life.
The power to control the outcomes in your life guarantees your success (or failure). [click to continue…]