Apprenticed Investor: The Zen of Trading
- 6. Take Responsibility: Many folks believe "the game is fixed." To them, I say: get over it. Stop whining and take the proper responsibility for your trades, your losses and yourself.
Your knowledge of the game-rigging gives you an edge. So use your hard-won knowledge to make money.
We have a national culture of blame-passing, and it infected investing long ago. Enron did not cause your losses, and neither did stock-touting analysts, or talking heads on CNBC. You did, and the sooner you accept this, the better off you will be.
A Chinese proverb is particularly insightful as applied to trading: "He who blames others has a long way to go on his journey. He who blames himself is halfway there. He who blames no one has arrived."
- 7. Constantly Improve: Investing is so competitive that you cannot afford to stand still. Investors should constantly seek to raise their skill level by learning as much as possible about the markets, the economy, trading technologies and various schools of investing thought. But whatever you read, you must do so with a keenly skeptical eye, while retaining an open mind ('taint easy to do).
One way to constantly improve is to find something for which you have a peculiar natural proclivity for and develop that gift. It may be moving averages, or position sizing, or MACD, or Bollinger Bands or the Arms index. Perhaps you have an expertise in some aspect of technology, or a particular sector.
This is essential because a developed expertise yields ancillary benefits. It bleeds over into everything else, with net positive results. The specific area of expertise you own does not matter as much as having one. Those of you who have been trading for a while will know exactly what I am referring to.
- 8. Change Is Constant: Heraclitus was a Greek philosopher best known for his "Doctrine of Flux": "The only constant is change."
That doctrine is especially true in the markets. Therefore, as you constantly upgrade your skills, you must remain supple enough to adapt to an ever-changing field of play.
Human nature -- especially in herds -- is unchanging. But these behaviors must be contemplated within their larger context. Add a new element -- PCs, lower trading costs, the Internet, vast amounts of cheap data, even CNBC -- and you introduce a new factor that impacts all the players on the field.
As conditions change, you must decipher how they impact your strategy, your emotions and your trading -- and adjust accordingly.
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