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Comments between >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.
Subject:
Novice vs Experienced Traders (interesting reading)
Date:
Thu, 26 Mar 1998 23:38:30 -0600
From:
Michael Charness <wsi@xxxxxxxxxxxxx>
To:
omega-list@xxxxxxxxxx
By Paul Forchione March 27, 1998
http://www.futures.net/
The legendary golfer Bobby Jones was quoted as saying
"It is nothing new or original to say that golf is played one
stroke at a time. But it took me many strokes to realize it."
I guess you could say experience is the best teacher. So
with this thought in mind, here's some of my thoughts
about the differences between novice and experienced
traders:
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I don't think the amount of experience you have is the correct term
or what matters.
There are a lot of experienced traders that are broke.
Let's say successful traders vs. unsuccessful traders.
I want all my students to be successful traders, including myself and
you.
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1. Novice traders (NT) hate taking losses.
Experienced traders (ET) have learned to "love" taking
losses. They even have specific rules for when to realize
their losses. It's the only way they've managed to "stay in
the game" long enough to realize profits.
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At the end of the year I clean my slate. I zero out.
Win, lose, draw. No old baggage for the new year.
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2. NT often
underestimate the importance of diversification and money
management.
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I don't believe diversification is that important.
I don't do the s/p. But I know people and probably some of you out
there that just trade the s/p and do really well.
I am trading one stock and doing well.
I watch it like a hawk.
Money management is how much you bet at one time, ie how much you put
into a
trade.
How much you put into a trade depends on how confident you are in what
you are
doing. If you do not know what you are doing. Make a small bet or
don't do it.
A trading strategy.
The Kenny Rogers (the country singer) Strategy.
>From his song the GAMBLER.
"You got to know when to hold them, know when to fold them, know when to
walk
away, know when to RUN"
"know when to hold them"
When your ENTRY criteria is met.
"know when to fold them"
When your EXIT criteria is met.
"know when to walk away"
When your ENTRY criteria is not met OR when you need a vacation.
A vacation is good weither you are winning or losing.
When you can walk away anytime, you know you got it.
A good trader makes money in any market, up, down, sideways.
Will discuss later.
"know when to run"
You need exercise. Physical exercise.
Running, walking, skiing, tennis, badminton, dancing,
basketball, swimming, cycling, etc.
Keeps you mind and body fit.
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ET follow a disciplined approach and never
overtrade or initiate large positions.
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I agree, a discipline approach.
A trader trades when his criteria is met.
Not before, and not after.
A successful trader knows the size of the position he will take.
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3. NT ask everyone's
opinion.
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New traders should ask questions. And think about the answers
they get. What does this mean. Does it apply to me.
Is this one of the fundamental truths of trading.
Is this person a successful trader.
ETC.
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ET are independent-minded.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.
A successful trader is open minded.
and is an independent thinker.
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They know if you
ask enough people you can find whatever opinion you're
looking for. 4. NT make decisions solely on expected
market direction. ET broaden their field of vision by
factoring both statistical and implied volatility into their
trading decisions.
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????????????????
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5. NT tend to be aggressive and to
think about the benefits of leverage.
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A successful trader know when to trade and how much.
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ET take a defensive
approach because they think about the losses that
leverage can cause.
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A successful trader does not have big losses regardless of leverage.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.
6. NT look for quick results. ET
implement strategies that "slow down" their need to
respond to the market.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.
Again, a successful trader trades his criteria.
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7. NT tend to like to anticipate
turns in the market. ET have learned it's easier and more
productive to ride the existing trend. 8. NT find the
"adrenaline-rush" of trading to be exciting. ET try to take
the emotion out of their trading so they can make
business-like decisions. 9. NT haven't learned the
personalities of the different markets yet. ET understand
the general characteristics of each market and use them
when planning trades.
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A successful trader trades to make money and keep it.
USE WHAT WORKS.
To new and old traders.
When someone says something substitute or ask yourself,
This is what he believes, he is speaking for himself.
How successful is he/she in trading?
Money talks and BS walks.
Good trading.
Make some money. Have fun.
Again, forgive the grammer, topo's, spelling.
Bob
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