Trading psychology and physical/emotional well-being is probably one of the least discussed, yet most important aspects of becoming a successful trader.
10 Lessons I Learned While Working With William O’Neil (Thread)
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Trading psychology and physical/emotional well-being is probably one of the least discussed, yet most important aspects of becoming a successful trader.
Start by taking good care of your physical and emotional health.
Next, pick up a couple of books and study trading psychology. Two excellent books on this subject are, “Trading in the Zone,” by Mark Douglas and “The Psychology of Trading,” by Brett Steenbarger
Having a sound set of rules that are proven to work is essential to success in the stock market. Why is this so important? Two words. Human nature.
What most traders don’t realize is that a thorough understanding of how to manage risk is even more important than picking the right stock.
The best stock pickers on the planet have a win rate of about 60-65% and anyone who tells you differently is lying.
Jesse Livermore said, “There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time.
Unfortunately, 99% of the professional money managers out there do not understand this whatsoever.
For example, going to cash early in the year during the 2008 financial crisis and sitting tight until confirmation of an uptrend once again played out worked out extremely well.
They’d much rather give it to someone else who is “working.”
There is no one right way, just what’s right for you.
The ultimate goal for every trader and investor should be to take a proven methodology and ultimately make it their own.
No two traders view things the same way, even if they are following the same exact methodology.
It’s very easy to let your emotions get the best of you and not get invested when the market follows through, for one reason or another. This is most often a result of fear or an incorrect opinion. Hence, see Lesson #2.
Doubting a valid follow-through day and not getting invested on time can be an extremely costly mistake. That is why we have sound rules and risk control in place.
A big ego is the biggest problem, especially if you trade for a living. Arrogant traders with huge egos all eventually implode.
WON was not shy about making this very clear.
Unfortunately, this is rather common.
There is no better way to gauge the market’s health than by the price/volume action of the market’s leading growth stocks.
So, understanding how to interpret price/volume action is an extremely important skill to develop.
Develop the conviction to listen to yourself and never anyone else.
Even if the CEO of a company has given you inside information that you know is 100% true, you still don’t know how the market will react.
The ability to remain positive when things aren’t working as planned makes the difference between winning and losing.
Missing trades and losing money is all part of the game. How you handle it is key.
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More from Psychology
V-day 💝. As promised, here are some 🔥 notes about psychotherapist @EstherPerel. We'll focus on the podcasts for now because her books deserve their own threads.
1-sentence summary: Esther is a modern-day relationship & love wizard. How does she do
Let's start by posing a question I love, one I heard Esther ask a couple who desperately wanted their relationship to survive,
"Are you prepared to mount a little inner revolution?"
So twitterers, are you?
The thread will be broken down into 5 sections:
• Why the Esther 😍?
• How to criticize
• How to argue
• How to listen when the body speaks (aka nonverbal communication)
• Skillful therapy (observations & Esther's commonly asked questions)
• Uncategorised quotes I love
Before we jump in, a quote from @interintellect_'s Esther salon 🔥
"Love is a form of information sharing. You create a circuit of information between a partner & you, + you keep digging in deeper layers. There is an infinite amount of beauty to discover in another person" -Anna
~ What's Fascinating About Perel?
Mostly, I want to be her.
Couples come to her when they're stuck. She unfreezes them, moving them from stagnant to flowing.
Why is she so good at it? That's the question I'm trying to answer & the reason I can't stop analysing her sessions
1-sentence summary: Esther is a modern-day relationship & love wizard. How does she do
Might mess around and make a thread of all my Esther Perel notes ahead of this salon.
— Nibrasness \u2022 in Lisbon \U0001f44b\U0001f3fd (@nibrasibn) January 8, 2021
A humble offering to the digital gods https://t.co/e5T9airZKn
Let's start by posing a question I love, one I heard Esther ask a couple who desperately wanted their relationship to survive,
"Are you prepared to mount a little inner revolution?"
So twitterers, are you?
The thread will be broken down into 5 sections:
• Why the Esther 😍?
• How to criticize
• How to argue
• How to listen when the body speaks (aka nonverbal communication)
• Skillful therapy (observations & Esther's commonly asked questions)
• Uncategorised quotes I love
Before we jump in, a quote from @interintellect_'s Esther salon 🔥
"Love is a form of information sharing. You create a circuit of information between a partner & you, + you keep digging in deeper layers. There is an infinite amount of beauty to discover in another person" -Anna
~ What's Fascinating About Perel?
Mostly, I want to be her.
Couples come to her when they're stuck. She unfreezes them, moving them from stagnant to flowing.
Why is she so good at it? That's the question I'm trying to answer & the reason I can't stop analysing her sessions
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1/ Some initial thoughts on personal moats:
Like company moats, your personal moat should be a competitive advantage that is not only durable—it should also compound over time.
Characteristics of a personal moat below:
2/ Like a company moat, you want to build career capital while you sleep.
As Andrew Chen noted:
3/ You don’t want to build a competitive advantage that is fleeting or that will get commoditized
Things that might get commoditized over time (some longer than
4/ Before the arrival of recorded music, what used to be scarce was the actual music itself — required an in-person artist.
After recorded music, the music itself became abundant and what became scarce was curation, distribution, and self space.
5/ Similarly, in careers, what used to be (more) scarce were things like ideas, money, and exclusive relationships.
In the internet economy, what has become scarce are things like specific knowledge, rare & valuable skills, and great reputations.
Like company moats, your personal moat should be a competitive advantage that is not only durable—it should also compound over time.
Characteristics of a personal moat below:
I'm increasingly interested in the idea of "personal moats" in the context of careers.
— Erik Torenberg (@eriktorenberg) November 22, 2018
Moats should be:
- Hard to learn and hard to do (but perhaps easier for you)
- Skills that are rare and valuable
- Legible
- Compounding over time
- Unique to your own talents & interests https://t.co/bB3k1YcH5b
2/ Like a company moat, you want to build career capital while you sleep.
As Andrew Chen noted:
People talk about \u201cpassive income\u201d a lot but not about \u201cpassive social capital\u201d or \u201cpassive networking\u201d or \u201cpassive knowledge gaining\u201d but that\u2019s what you can architect if you have a thing and it grows over time without intensive constant effort to sustain it
— Andrew Chen (@andrewchen) November 22, 2018
3/ You don’t want to build a competitive advantage that is fleeting or that will get commoditized
Things that might get commoditized over time (some longer than
Things that look like moats but likely aren\u2019t or may fade:
— Erik Torenberg (@eriktorenberg) November 22, 2018
- Proprietary networks
- Being something other than one of the best at any tournament style-game
- Many "awards"
- Twitter followers or general reach without "respect"
- Anything that depends on information asymmetry https://t.co/abjxesVIh9
4/ Before the arrival of recorded music, what used to be scarce was the actual music itself — required an in-person artist.
After recorded music, the music itself became abundant and what became scarce was curation, distribution, and self space.
5/ Similarly, in careers, what used to be (more) scarce were things like ideas, money, and exclusive relationships.
In the internet economy, what has become scarce are things like specific knowledge, rare & valuable skills, and great reputations.
