a. Charts are the footprints of money.
b. We follow charts to our highest probability.
c. We use charts to give us the “house edge”.
2. Three emotions move the market.
a. Greed
b. Fear
c. Uncertainty
3. Uncertain trades and set-ups.
a. When in doubt, get out.
b. You can always get back in.
c. Clearing the slate (selling out) also clears the mind.
d. There are times when the market rewards the cowards.
e. A 5% loss on a stock that drops 20% is a win, not a loss.
f. A good defense is at times the best offense.
g. Stepping aside guarantees that you live to play another day.
4. The Gambler.
a. The desire for the big score is one of the signs of a truly novice trader.
b. Trading is a life long process.
c. Each trade should be looked at as one tiny trade in a lifetime of trades.
d. If you gamble enough times then be advised that the house always wins.
5. Stock price directions.
a. Up.
b. Down.
c. Sideways.
d. What does each direction indicate in the market?
6. Truth.
a. Stocks rise and fall based on beliefs, not facts.
b. Buy the rumor, sell the news.
c. The truth doesn’t matter on Wall Street.
d. We trade people, not stocks.
e. Fortune waits for its captor in the shadows of uncertainty.
7. Signs that we are being contaminated by our prior losses (emotions) are:
a. Chronic hesitation (which is really the hidden desire for certainty).
b. Fear of pulling the trigger (which is the desire for certainty, again).
c. Grabbing at profits too quickly or early.
d. Failure to take a loss (stop).
8. Thinking.
a. Too much is not good.
b. Be a doer who doesn’t have to think about doing.
c. Discipline becomes actions, which becomes instinct.
9. Imagination.
a. If you have one, it could be a problem.
b. Imagination is the element that deals in the world of nonfacts.
c. Stay rooted in what is real, actual, and factual.
10. Fear.
a. Fear is the bane of intelligent action.
b. It cripples the mind and judgement process.
c. It erodes the intuitive faculties that we need to develop.
d. Fear is poison.
11. Greed.
a. Bulls and Bears make money, but Pigs make none.
b. Home run hitters should be left in baseball.
12. Information.
a. In some cases, the less the better; stick to your rules.
b. Too much info helps stimulate the imagination.
c. Opinions start to form.
13. Expectations.
a. Too many expectations are sure signs of an unseasoned novice.
b. Overzealousness needs to be identified.
c. Keep goals reasonable and attainable. Be short term with goals and revise.
14. Excessive Analysis.
a. Too much analysis will prevent action and increase uncertainty.
b. If it falls into our plan and meets the criteria then JUST DO IT!!
15. Hope.
a. Hope is a dangerous thing.
b. Hope promotes inaction precisely when action is required.
c. Hope keeps you holding on to a loser.
d. Sell hope, but don’t buy it!!
16. Be Humble.
a. When you are humble you are ready to learn.
b. When you learn you are able to practice effectively.
c. When you practice effectively you can implement successfully.
d. When you implement successfully you can bask in your own glory…only to remember that humility is where you began.
17. Teach, Teach, Teach!
a. When you get home, teach your wife, girlfriend, brother, neighbor…
b. When you teach you learn more!
c. Teaching is practicing!!
