Tuesday, December 20, 2016

Christmas Gift Suggestions and Recipe for a Happy New Year

I will honor Christmas in my heart, 
and try to keep it all the year. 
Charles Dickens

Christmas gift suggestions:

To your enemy: Forgiveness. 
To an opponent: Tolerance. 
To a friend: Your Heart. 
To a customer: Service. 
To all: Charity. 
To every child: A Good example. 
To yourself: Respect. 


Oren Arnold 


Recipe for a Happy New Year 
Author Unknown


To leave the old with a burst of song
To recall the rights and forgive the wrong;
To forgive the thing that binds you fast
To the vain regrets of the year that's past;

To have the strength to let go your hold
Of the non-worthwhile of the days grown old;
To dare to go forth with a purpose true;
To the unknown task of the year that's new,

To help your brother along the road
To do his work and lift his load;
To add your gift to the world's good cheer,
Is to have and to give a Happy New Year.


    From our Family to yours, we wish you a Christmas that is joyful and warm. And a Happy, Healthy, and very Prosperous New Year!

Wednesday, December 14, 2016

Win or Lose: You Are A Winner Every Day


Few cases of eyestrain have been developed by looking on the bright side of things Unknown.   
Have you ever spent the day making trade after trade and gotten nowhere? You may have wondered why you woke up that morning, or even bothered trading that day. Perhaps there have been a few days where you've felt this way this week. It's been a hard week so far. If you aren't doing very well, it is understandable. Uncertainty abounds. On days when you are feeling unproductive, it's vital to have an upbeat attitude, though. You need to lift your spirits. So what if a given trading day wasn't fruitful? Who cares if you lost money today? Take it all in stride. How can you be so carefree, you ask? Real money was lost, so how can anyone convince himself or herself to feel good? There are trading days when your rewards are tangible profits and you can bask in the glory of success, and then there are those days where you must chalk the day up to experience. You settle for saying, "Perhaps I learned something valuable today. Let's figure out what I learned and be grateful that I got something out of the day."

What did you learn today? What did you experience? Did you make it through the day relatively unscathed? That's worth something. Maybe you learned that you could stand aside when you wanted to and get out of harm's way. It is something worth learning. Maybe you jumped into the markets too soon, and felt a little bit of regret from losses. Were the losses justified? Did you follow your plan, but the plan didn't work. If you lost because of a faulty plan, it's still valuable knowing that you could follow a plan. Losses due to impulsive decisions are another matter, however. If you traded impulsively, perhaps you learned how you might prevent impulsive decisions in the future. No matter what happened, though, you learned a valuable lesson.

In the modern, competitive world, we are obsessed with winning races. We want to make more profits than the next trader, and when we fail to make profits, we feel beaten. But the only benchmark that should matter is your own. So what if you don't make profits every single day? Maybe you do not yet have the skills or financial resources to make a profit every day. Even if you consider the metaphor of winning a race with other traders, would you try to run a marathon without the proper amount of practice? Would you feel disappointed if you couldn't reach an athletic goal that you knew would take more training than you had? You definitely would not, so why make such high and lofty trading goals? Give yourself a break. Sometimes it is wise to just do your best and accept what you've achieved. When you set high goals that exceed your skills, you will usually feel discouraged, and that may make you feel like giving up. Rather than kicking yourself for not performing up to par, consider the fact that you have learned a valuable lesson today and every day, win or lose. You may not have achieved a high performance goal, but you have achieved a learning goal. In other words, you have moved one step closer to fully mastering the markets. Every little experience counts. So rather than beat yourself up for failing to reach your standards, pat yourself on the back for making it through another trading day. Remind yourself that you are a winner. Don't set overly high performance goals that you can't achieve. Focus on skill building, rather than on making huge profits. When you focus on skill building, you will feel better, and you will keep trying. And in the end you will make the huge profits you desire.

The above is a reprint from the defunct “
Innerworth Newsletter” written in 2006. Enjoy and save for yourself.

Tuesday, November 22, 2016

Lincoln's Thanksgiving Day Proclamation


Lincoln wrote a proclamation, which was issued on October 3, 1863. The New York Times published a copy of the proclamation two days later. The idea seemed to catch on, and the northern states celebrated Thanksgiving on the date noted in Lincoln's proclamation, the last Thursday in November, which fell on November 26, 1863.
Washington, D.C.

October 3, 1863

By the President of the United States of America.

A Proclamation.

The year that is drawing toward its close has been filled with the blessings of fruitful fields and healthful skies. To these bounties, which are so constantly enjoyed that we are prone to forget the source from which they come, others have been added, which are of so extraordinary a nature that they cannot fail to penetrate and soften the heart which is habitually insensible to the ever-watchful providence of Almighty God.

In the midst of a civil war of unequaled magnitude and severity, which has sometimes seemed to foreign states to invite and provoke their aggression's, peace has been preserved with all nations, order has been maintained, the laws have been respected and obeyed, and harmony has prevailed everywhere, except in the theater of military conflict; while that theater has been greatly contracted by the advancing armies and navies of the Union.

Needful diversions of wealth and of strength from the fields of peaceful industry to the national defense have not arrested the plow, the shuttle, or the ship; the ax has enlarged the borders of our settlements, and the mines, as well of iron and coal as of the precious metals, have yielded even more abundantly than heretofore. Population has steadily increased, notwithstanding the waste that has been made in the camp, the siege, and the battlefield, and the country, rejoicing in the consciousness of augmented strength and vigor, is permitted to expect continuance of years with large increase of freedom.

No human counsel hath devised, nor hath any mortal hand worked out these great things. They are the gracious gifts of the Most High God, who while dealing with us in anger for our sins, hath nevertheless remembered mercy.

It has seemed to me fit and proper that they should be solemnly, reverently, and gratefully acknowledged as with one heart and one voice by the whole American people. I do, therefore, invite my fellow-citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November next as a Day of Thanksgiving and Praise to our beneficent Father who dwelleth in the heavens. And I recommend to them that, while offering up the ascriptions justly due to Him for such singular deliverances and blessings, they do also, with humble penitence for our national perverseness and disobedience, commend to His tender care all those who have become widows, orphans, mourners, or sufferers in the lamentable civil strife in which we are unavoidably engaged, and fervently implore the interposition of the Almighty hand to heal the wounds of the nation, and to restore it, as soon as may be consistent with the Divine purposes, to the full enjoyment of peace, harmony, tranquility, and union.

In testimony whereof, I have hereunto set my hand and caused the seal of the United Stated States to be affixed.

Done at the city of Washington, this third day of October, in the year of our Lord one thousand eight hundred and sixty-three, and of the Independence of the United States the eighty-eighth.

Abraham Lincoln



Happy Thanksgiving from PrudentTrader.com

Thursday, November 3, 2016

Is Your Mind Open?

I'm willing to meet with anyone, Democrat or Republican, who has a good idea, an open mind and a willingness to come together to tackle the challenges we face.
Brad Schneider

Do you have an open mind? Think about it a moment; an open mind is a free mind. Your inner winner image emerges as you open your mind to new ideas, new thoughts, new concepts, new people. If your mind is closed to new ideas and concepts, you are closing a door that imprisons your own mentality.


Prejudices occur when you close your mind and lock the doors. Intolerance cuts off the flow of ideas between your subconscious and your conscious mind. It also cuts off communication with others that may brighten your horizons.


About 100 years ago, The Wright Brothers decided to invent a flying machine. History tells us, the majority ridiculed them. In fact it was the closed minds of that majority; that rejected the concept, the idea. Luckily for us all The Wright Brothers listened to their inner selves. Your inner winner (self) is a voice that encourages you to try and try again. That voice will give you the courage in the face of ridicule.


If you are working on a project and seem to be stuck, or if you are unsure of what to do about your investing and trading dollars, then form a brainstorming partnership with at least one other friend. Share with them your problem, your confusion, your wishes, your desires, your
concerns, and ask for help. Put the power of two or more brains to work on the situation. The Wright brothers succeeded because they put the power of more than one brain into their dream.


After more years in the markets than I sometimes care to admit, I still seek out others with new, different, and perhaps fresh ideas. It does not matter if they are 60 years in the market or just 1. Many times it is the new or relatively new trader who has a fresh and different perspective. While I may see caution written all over his or her words, it often sparks an idea that I will give further attention to.


You will discover that brainstorming forces your inner winner to come to the surface. The more you use it, the more it will work to assist you.

Wednesday, October 5, 2016

Everyone Needs Their Ego Fed

Don't let your ego get too close to your position,  so that
if your position gets shot down, your ego doesn't go with it. 

Colin Powell
The psychology of the market, as well as the psychology of the investor-speculator-trader, is of equal if not greater importance, than any market indicator.

According to a recent survey 97% of people feel they do not receive the praise, approval, and appreciation they deserve. Likewise 98% of people said they would perform better if they received more praise, approval, and appreciation. The government and business executives alike worry about low profits, inability to compete, and lack of initiative. You and I are concerned about how we get better cooperation from customers, employees, and family. How can we get other people to help us win our goals?

Your ego is your self. It is the most personal self-oriented part of your mind. Your ego is your underlying spiritual substance and regulates your mental state and self-esteem. It is by far the most sensitive part of your psychological and philosophical structure. A broken leg may heal in weeks; a damaged ego may never heal.

Just as the body needs food to sustain itself, ego food is mental nourishment that makes you feel better about yourself. Ego food takes the form of praise, encouragement, appreciation, and respect. It enlarges ones sense of self-worth makes them and you feel important. It also makes you and others feel useful and needed. Ego poison is the direct opposite of ego food. Ego poison consists of comments and actions that make you and others feel self-deprecated, unimportant, useless, "bad","stupid", and "small".


What happens when we feed ego food? Ego food, when sincerely dispensed, will help you win friends, win employee cooperation, gain love and support from people closest to you. In short, help you succeed. In the business of risk taking, there are so many times you will temporarily damage your own ego, and create self-doubt. It's not you; it is the nature of the beast. If you practice giving sincere ego food to others, they in-turn will feed your ego at the times it is most needed.

At work, at home, in community environments people perform second rate because they feel scorned, overlooked, belittled, taunted, or punished. The result, they defend their egos by acting the role of saboteurs. Think about that for awhile, then the next time the opportunity presents itself decide whether you will feed ego food or ego poison? And also think about which you would rather receive, from your spouse, co-workers, friends, and fellow risk-takers?


There are two ways to own the tallest building in town. One way is to tear all the others down!

Wednesday, September 14, 2016

Don't Blame Circumstances

Part of being a man is learning to take responsibility for your successes and for your failures. You can't go blaming others or being jealous. Seeing somebody else's success as your failure is a cancerous way to live. 
Kevin Bacon
We all from time to time face difficult problems, situations and circumstances. Whether it be in our personal lives, the business world and our jobs, or what to do in the marketplace. Our natural tendency is to blame the circumstances that surround us for the particular difficulty we are presently facing. Everything I know about the market said it was supposed to go up and it went down instead. How could I possibly have known this or that would happen?

One of the hardest lessons, to not only learn, but accept and understand; is that circumstances are not negative or positive, circumstances are neutral. It is our thinking, our perspective, that make circumstances either positive or negative. Try and think of these difficult circumstance in this vain, - "Everything in the universe has its opposite." There is a
North Pole and its opposite is the South Pole. If you live 150 miles from New York City, then it must be 150 miles from New York City to where you live. If something you considered bad happens in your life, there has to be something good about it.

If you suffered a loss on a trade or series of trades, you have probably gained a good deal of knowledge as to the why, and you have probably gained even more knowledge about controlling risk. The gains in knowledge, over time, will far out balance the loss or losing streak you have just suffered, by rewarding you in the future.

I hope it's clear, that every circumstance can be viewed in two ways. And it's the way we view the circumstance that determines its impact on our thinking and our mental state. No matter how bad the circumstance appears to be, taking another look, from another perspective, will reveal the potential good.

Napoleon Hill, author of the classic "Think and Grow Rich," wrote, "Every adversity, every failure and every heartache carries with it the seed of an equivalent or a greater benefit."

Wednesday, August 31, 2016

Motivating Yourself

Always do your best. 
What you plant now, 

you will harvest later. 

Og Mandino
When everything is going according to plan and you are "on", you are in the most positive and highly motivated state you can attain. Your mind is set on it's path and you are in a state of total concentration and focus. Your mind is totally committed to what you are doing. The bad news however: This is not a state of mind you can just choose at will.


In any endeavor, the process of growth and achievement has four key elements: Goals; Actions; Awareness; and Change. Each one of these factors is crucial, but the foundation for the process is goals. Writing a few sentences or listing some things you'd like won't establish goals. Goals have no power until you experience them as real. You must experience them not as something you merely want, but as something you need to sustain life - like food.


Your mind is a supercomputer that you can program to experience a goal as a fundamental need. Then your mind (supercomputer) will do everything it can to drive you toward your goal, and the rest of the steps will follow much more easily: what you do, the output of your mind, it all depends on the input. The input is simply: what you perceive, how you process the information, how you look at reality with your conscious mind, and how you have trained or failed to train your subconscious mind to function. Free will really means that you can change the programming in your mind.


Emotions determine motivation. We are driven by two fundamental forces at the
emotional level, the desire to attain pleasure and the need to avoid pain. When we want something, is it the "thing" we really want? What we really want is the change we think it will cause in our mental and physical state of being, that makes us want what we want. People who desire to lose weight do not care much about the actual"fat cells". They want to change the way they feel about themselves. What they really want is to feel in control of their lives, to feel healthy and live longer, to feel more attractive to others, to feel more energetic and excited about life.


A profitable trading record can and often does have more losing trades than winning ones. If this is the case, then obviously the profits from the good trades must be larger than the losses from the more frequent losers. The most common error traders make is taking profits too early and allowing the loses to run to far. The reason is simple: at the time we are not motivated by the rules, we understand them but we don't realize them. Why do we do this? The need to avoid the pain of losing, and of being wrong drives us to deny rules we know to be right. To execute the rules is painful, but not executing them will increase your state of dissatisfaction and deplete your trading capital. I think upon self-examination, you will find some form of the pleasure/pain paradox is at work when you are having trouble moving towards your goals in your trading account and in life.


Just as we feed ourselves food everyday, we often need to feed our minds motivational food, to keep our focus, direction, and attitude. You can accomplish this with books, or very popular audio listening material. A Quote of the Day site might help as well

Thursday, August 25, 2016

It's Not Necessary to Understand Everything

Look deep into nature, and then you
will understand everything better.
Albert Einstein

Time is one of those things none of us can create. Achievers invariably manage to be time misers. They extract the essence from a situation, take out what they need, and do not dwell on the rest. In the markets, it is not necessary to be able to understand every aspect of a company's financial statement, or to understand every aspect of economic prospects to trade the markets. It is also not necessary to understand every technical indicator. There is a balance between understanding everything and picking what you need to know.  

Many successful people live by a very useful belief. They do not believe they have to know everything about something in order to use it. They know how to use what's essential without feeling a need to get bogged down in every detail. A very simple
example: I am sure all of you own a TV and a remote control device. How many know exactly how they work? What you do know is how to use it. Simply press the power button and the TV is on, press the channel button and it changes channels. It is not necessary to know the inner workings in order to use it. 

In order to effectively use all that you are in this life, you should discover that there is a balance between use and knowledge.

"You can spend all your time studying the roots, or you can learn to pick the fruit". - Anthony Robbins.
There were probably plenty of scientists and engineers at major universities who knew more about computer circuitry than Steve Jobs and Steve Wozniak (founders of Apple Computer), but they were so effective at using what they had.


If you follow the markets every day, in time you will become proficient at extracting the information you need to make a decision. Whether it is looking through hundreds of charts, or the use of market scans looking for stocks fitting your personal criteria, or breaking down the marketplace into sectors and groups to determine what's hot and what's not. As you gain experience you will become very proficient at extracting the information you require. Then merely include these stocks, sectors, or groups you have found into a watch list where you will keep extensive notes on such things as: buy point, sell point, and your perceived risk and potential gain.  

Wednesday, August 10, 2016

Blaming Circumstances

You must take personal responsibility. You cannot change the circumstances, the seasons, or the wind, but you can change yourself. That is something you have charge of.  
Jim Rohn

We all from time to time face difficult problems, situations and circumstances. Whether it be in our personal lives, the business world and our jobs, or what to do in the marketplace. Our natural tendency is to blame the circumstances that surround us for the particular difficulty we are presently facing. Everything I know about the market said it was supposed to go down and it went up instead. How could I possibly have known this or that would happen?

One of the hardest lessons, to not only learn, but accept and understand; is that circumstances are not negative or positive, circumstances are neutral. It is our thinking, our perspective, that make circumstances either positive or negative. Try and think of these difficult circumstance in this vain, - "Everything in the universe has its opposite." There is a North Pole and its opposite is the South Pole. If you live 150 miles from New York City, then it must be 150 miles from New York City to where you live. If something you considered bad happens in your life, there has to be something good about it.

If you suffered a loss on a trade or series of trades, you have probably gained a good deal of knowledge as to the why, and you have probably gained even more knowledge about controlling risk. The gains in knowledge, over time, will far out balance the loss or losing streak you have just suffered, by rewarding you in the future.

I hope it's clear, that every circumstance can be viewed in two ways. And it's the way we view the circumstance that determines its impact on our thinking and our mental state. No matter how bad the circumstance appears to be, taking another look, from another perspective, will reveal the potential good. 

Napoleon Hill, author of the classic "Think and Grow Rich," wrote, "Every adversity, every failure and every heartache carries with it the seed of an equivalent or a greater benefit." 

Thursday, July 14, 2016

A Traders Character

The foundation stones for a balanced success are
honesty, 
character, integrity, faith, love and loyalty. 
Zig Ziglar
What does it take to be a successful trader? Experience? A good "feel" for the market? Mastery of technical and fundamental analysis? While these elements are important, reaching the highest level of "facts and figures" expertise is not in itself sufficient. To achieve real success as a trader, no matter how you define it, you must have all the ingredients of a trader's psychology: good character, a certain personality type, and a particular way of thinking.

Analytical tools and the mental ability to apply them intelligently are absolutely essential to be a success in trading, but genuine success as a whole, takes more than a good brain. It takes Character!


Webster's dictionary defines character as "the complex of mental and ethical traits marking a person." Do you put your own interests and those of your family first? Or are you more concerned with the well being of others? Do you choose honesty over lying, integrity rather than hypocrisy, productiveness over idleness? Can you consistently weigh, based on an internal sense of right and wrong, justice versus mercy, rationality versus emotional whim, pride versus humility? The process of making those choices and decisions may seem intuitive and hard to explain, but in all cases it begins with your own personal sense of morality and ethics - in other words, your character.


Your character is set by what you value, what you strive for. Your overall ethical structure - your values and your beliefs - determines character: it determines what you do.


For example, suppose two people both value money. That is, both want to make a lot of money. One has a healthy view toward money, seeing it as a means to many desirable ends. The other however holds the subconscious belief that "money is the root of all evil."


If both make a lot of money, the first would be more likely to enjoy it, spending it for a nice home or dream vacation. The other person however, may find it impossible to truly enjoy his money. He may feel a vague uneasiness when spending it, or may be guilt-ridden when booking that dream vacation. If that second person made his money trading the markets, in all probability, his guilt will force his subconscious to lose most if not all of it.


Are your character traits suitable for trading? Definitely worth thinking about!

Thursday, July 7, 2016

A System Everyone Can Use

Your brain is much better
than you think, just use it!
Leonardo Da Vinci
Whether you think you can, or think you can't, you're absolutely right. The novel and the movie "The Da Vinci code" has brought this fascinating individual to the forefront in recent years. I believe that we can learn a great deal from Leonardo Da Vinci as well as others who have gone before us. 

Just like the young learn to survive by following and imitating their parents, a key component to being successful is to imitate successful people. Humans, unlike any other species, can choose whom they would like to imitate. Leonardo Da Vinci felt that throughout our lives, and all of its stages, we should learn to consciously choose role models and to replace the ones we outgrow.

By doing this you will begin a positive adventure toward your worthy goal. For example, if you want to become a better trader, study the great traders, Jesse Livermore, Paul Tudor Jones, and Victor Sperandeo, to name a few. Read what they have written and what is written about them. Study their habits and imitate them. If you want to become a leader, study Abraham Lincoln (he never quit) or Winston Churchill. 

Michael Gelb who wrote the book "How To Think Like Leonardo Da Vinci" writes, "It would take an encyclopedia to begin to do justice to the full scope of Leonardo's accomplishments." Da Vinci had visions. What set him apart is that he acted on his ideas. What's most fascinating is the fact that Da Vinci had a "system" he invented and followed religiously every time he began a new idea. It's a very simple system you can use to help you achieve your goals. 

Da Vinci called it the "Smart System", S M A R T, being an acronym for: 
S -   Specific: Define exactly what you want. 
M - Measurable: figure out how you're going to measure your goals. 
A - Accountability: Commit to being personally responsible for achieving your goals. If part of a team, be sure that accountability is clear. 
R - Realistic/Relevant: Set goals that are ambitious but achievable. Make certain your goals are relevant to your purpose. 
T - Timeline: Set a clear time line for the achievement of your goals.
Great plan, wonderful system, easy word, "SMART"

By the way, I'm sure you know that Da Vinci created the timeless paintings, "Mona Lisa" and "The Last Supper". But did you know that he also created the parachute, bicycle, helicopter, folding chair, alarm clock, and the first comprehensive drawings of the human anatomy! Not a bad role model himself! 

Thursday, June 9, 2016

Your Trading/Investing Inner Enemy

It is better to conquer yourself than to win a thousand battles. Then the victory is yours. It cannot be taken from you, not by angels or by demons, heaven or hell.
Buddha
I've seen traders sit quietly, motionless, appearing in control, while their minds are in such a twisted rage that they are incapable of closing a bad position. I have seen people curled up in their seats holding their stomach in physical pain from stress. I've been before the screen, myself, palms sweating, blood pounding, face flushed, and adrenaline pouring through my veins, as if I were in physical danger. All I was doing was watching numbers on a computer screen. Ever wonder what the inner enemy is, that makes this business such a battle? What are the forces that can bring out irrationality, even violence, while watching something as logical as numbers?


Learning to conquer the inner enemy may be the single most important element in succeeding as a trader or speculator. While some fail and some succeed, the difference is not intelligence, it is not knowledge. It is the will to execute knowledge! Acquiring the requisite
knowledge to trade is relatively easy, execution not necessarily so. Take for example the subject of weight loss. You can walk into any bookstore and find a countless number of books, by experts, on the subject of weight loss. Yet only 12% of those who start a weight loss program actually lose weight and only 2% maintain the weight loss for more than one year. That is a 2% success rate, which is even worse than the 5% success rate for people trading futures.


Whether it is losing weight or trading, the most difficult part isn't knowing what to do or how, the most difficult part is making the decision to do it, and sticking to it. When following through is difficult, it is because our minds are still in a state of conflict regarding which course to take. What is the source of this conflict? Why is it that even when we know what we should do, it often seems impossible to do it?


"My head tells me to stop, but my heart tells me to go for it," this common statement
implies a dualism in the nature of human beings; the rational side on one hand and the emotional side on the other. Most people believe these two aspects of human nature are separate, unrelated, and often in opposition to each other. The acceptance of this dichotomy between emotion and reason, the belief that they are necessarily unrelated and often conflicting, is at the root of most human conflict.


How can it be possible to lead an integrated, fulfilled life without suffering constant inner turmoil and frustration? If you accept the premise that emotions and reason are mutually incompatible, it is not possible. As long as you believe the soul is destined to permanently duel with itself, it will. This is the enemy that can make trading such a war. The way to end it, is to challenge the premise that emotions and reason are separate and unrelated aspects of human nature, which means focusing on the nature and purpose of emotions in human life, with particular emphasis on the role of anger and fear.

Thursday, May 26, 2016

Open Yourself Up to the Risks of Life

Values, not disasters, are the goal, the first concern, and the motive power of life.
Ayn Rand. 

This implies that while people and the world are imperfect, while pain, suffering, and disasters do exist, they do not have to be and should not be the focal point of living. Too often, pain and disasters are the focus of living. Rather than spending their time and energies on the pursuit of values, they spend it trying to avoid pain, and that makes pain the focal point in life. 


If avoiding pain is the focus of life, positive action is limited. If you allow pain to
become the dominant force in life, you sabotage your ability to think, grow, and to produce. If the avoidance of pain is your focus, it becomes extremely difficult to experience the process of living with the passion and spontaneity that you are capable of.


Life involves risks. The essence of maintaining your mental well-being as a trader is taking a position in which you feel confident, while always knowing that you may not be rewarded for your work, your thoughts, and your willingness to take a risk. Even more important, when you don't win, you have to be willing to pick up and do it again. You have to be open to the pain that so often accompanies honesty and growth. The same is true of every aspect of living. 
Virtually every act in life should be an act of love, the essence of giving of yourself, but giving with the knowledge that you may not get anything in return and, then being able to pick up when you are unrewarded and give again. By giving in this way, the returns come back manifold both financially and in terms of the happiness you experience. 


You can give of yourself by using your mind, and get your return by having new opportunities and experiences available. Through your actions and efforts you bestow upon yourself new options and alternatives. You can give to yourself by taking risks in the financial markets, and receive financial benefits. You can give to others simply by opening yourself up and letting others see the real you. By dropping the self-protective shields designed to prevent people from hurting or rejecting you, and get your return from those special friends who make you feel seen and understood, who act as the mirrors of your soul. 


Opening yourself up to the risks of life may be frightening, but the fact is, there is no alternative. You will suffer pain one way or the other. There is no freedom from risk. There is no freedom from fear. There is no freedom from pain. There is no freedom from the possibility of failure. There is freedom in the acceptance of all of these as part of trading, as a part of life, and moreover, as the least important part of both.

Friday, May 20, 2016

A Self-Fulfilling Prophecy

Whatever we expect with confidence becomes our own self-fulfilling prophecy. 
Brian Tracy

Most people have similar end values, but each of us experience them differently. This is simply because of both major and subtle differences in our beliefs. Beliefs take two forms: Broad generalizations about life, people, and things; and rules we use to measure the worth of our own and others' actions. Rules are more definitive. Rules determine, in our minds, the things and events that must happen in order to experience results in a particular way. Rules take the form of "if, then" statements such as "If I make a million dollars in the market I can quit my job and then I'll be happy" or "If I make a mistake on a trade, then I'll learn from it." All of us have our own unique set of beliefs and rules, and it is this unique set that gives each of us a distinctive personality. 


One of the attributes of a successful investor is self-confidence. Feeling self-confident comes from recognizing your personal worth and effectiveness. How you feel about yourself depends not so much on what you actually do, but how you judge what you do, and how you judge what you do depends on your beliefs about what it takes to be a worthwhile person. To gain self-confidence, you must establish standards that make it possible. Suppose, as a successful trader, your standard is to cover your overhead and make a profit each month. Now suppose, instead, that your standard is to net $1 million dollars each month. It would be hard to be self-confident under those circumstances. Set your goals high, but be easy on yourself in setting standards for evaluating your self-worth. 


Your beliefs are the ultimate self-fulfilling prophecy. Your subconscious is gullible - it believes what you tell it to believe. If you believe you don't deserve to be successful, it won't let you be successful. If you believe you don't deserve love, it won't let you achieve love. If you believe that you aren't intelligent enough, it will make you stupid. Believe me when I say to each and every one of you, you are intelligent enough! 


The statements we make to ourselves and the questions we ask are both a cause and a consequence of our beliefs. When you say something to yourself like "I am so stupid!", after a losing trade, you are both stating and reinforcing a belief, however briefly you may think it is true. You may not mean this in a fundamental sense, but if you say it often enough and especially in a highly emotional state, then your mind is very likely to start believing it. 


When defining new rules that you want to adopt, remember to rig the game of life so it's easy to win. Rules that allow you to feel passion, love, happiness, success, and so forth don't have to be difficult or even impossible. We all need challenge in our life, but there is more than enough challenge in striving, for a constant progression of goal achievement without setting ourselves up for failure. Life is too short, too precious, and too full of potential to waste time by setting ourselves up to experience life as futile.

Thursday, May 12, 2016

Enable Yourself to Become Aware

Self-awareness is not the same thing as self-approval, any more than imagination is the same thing as day-dreaming.   Francis Spufford
If you show a stock chart to someone who knows virtually nothing about graphs and the financial markets, what do you suppose they see? Basically, they would see a confusing collection of lines, numbers, and so on and at most they would see some sort of wavy pattern. 

Your range of awareness is contextual. In order to be aware of anything, you must understand the nature of what you are dealing with. Your subconscious mind can only make sense of that which it is programmed to make sense of. That is why knowledge is so very important. In this example the subconscious will simply not take in very much information - it just doesn't know what to do with it. 

The biggest block to awareness is the often-inadvertent programming of our minds. If we instruct our subconscious, that something is unimportant, not to take in certain kinds of
information, then it won't. It will be impossible to be fully aware of what is occurring. When you aren't getting the results that you want, something is wrong - there is a contradiction somewhere in your mind blocking you. Probably the biggest block to achieving, is the limitations to awareness that we inadvertently place in our minds, through the acceptance of negative associations and beliefs. Conversely, positive associations and beliefs enable awareness. 

You and only you are responsible for the results you realize. Super-trader and trainer Dr. Van K. Tharp explains it this way: 

"The best thing and investor (or anyone) can do, when things go wrong, is to determine how he or she produced those results. Now, I don't mean that you should blame yourself for mistakes either. I mean that at some point in time, for any situation, you made a choice that produced those results. Determine what that choice point was and give yourself other options to take when you encounter a similar choice point in the future. Change the decision at similar choice points in the future and you will change the results you get. And by imagining doing so now you can make it easy to select those alternatives in the future." Dr. Van K. Tharp, The Psychology of Trading, from Market Wizards, by Jack D. Schwager 
It is extremely tempting to blame our mistakes, failures, and pain on other people or events. If, however, you continually remind yourself that they are yours and are a result of your action, then you enable yourself to become aware of what caused them. Mistakes, failures, and pain are a part of life, and we all want to avoid them. But you can't avoid them by denial. If you choose to accept them as a part of life then they lose their power over us. They become OK, acceptable, normal, even a positive opportunity to learn, and grow. 

In Reminiscence of a Stock Operator, Jesse Livermore said, "I don't mind making mistakes, what I don't like is being wrong." What I believe he meant was that making an error is okay, but what isn't okay is making an error, not admitting it, not learning from it, and continuing to do it.

Thursday, May 5, 2016

Impulsive Behavior and Trading

I've always loved to play games, and face it: investing is one big game. You need to be decisive, open-minded, flexible and competitive.
Stanley Druckenmiller
Impulsive people have a way of reaching conclusions and taking action that, in comparison with normal deliberations and intentions, would be considered impaired. Acting on a whim, giving in to temptation, doing what you have told yourself time and again not to do, is acting impulsively. Impulsive people are not self-confident but simply hope and wish for results. Quite simply they have no long-term goals, within which trades and management should be planned, only immediate urges. Their behavior is abrupt and unplanned. The time between thought and action is very brief.

The net outcome of unplanned behavior is when failure occurs, the process of analyzing bad trades and malfunctions, that person cannot accrue effective lessons from the loss. Without a plan, impulsive people can't develop methods to determine what works and what doesn't. They can't understand why they failed.

Impulsive people are also deficient in a certain method of thought process. Normal people weigh, analyze, research and develop an initial impression. Impulsive people guess and bet heavily without much thought. Impulsive people are often victim blamers. The results are reflective of character and personality, not intelligence. 

Victim blamers tend to interpret anything in life that doesn't go their way as somehow aimed against them, believing somebody or something is working against their welfare. It may be a boss, a girlfriend or an entity such as a company or the government. Or it may be outside forces such as "bad luck," "nature," "evil forces". They never learned to assume personal responsibility for their own actions versus blaming others. While everyone tends to lapse into blaming others at least sometimes for their misfortune, this trading type makes blaming their primary defense mechanism to deflect their own sense of urgency. 

Because they are looking for someone to blame for their investments that lose money, they are among those most in favor of intense governmental investigation and prosecution of market manipulation of any kind. With each fresh uncovering of company accounting fraud, brokerage-analyst duplicity, insider trading or any other type of market manipulation, they smile and say, "See, I told you they're all out to get us!" But this only tends to make them feel more helpless and assume less responsibility for their own investing decisions. 

If you have a tendency to be impulsive, the cure is to put together realistic and sound goals along with a realistic trading plan. Make yourself work towards the attainment of those goals by not violating the rules of your trading plan.

Friday, April 29, 2016

Why Investors and Traders Fail

It's fine to celebrate success but it is more important to heed the lessons of failure. 
Bill Gates
Those of you, like I, who have been around the markets for many years have seen seemingly good traders all of a sudden self-destruct. They normally buy 10 contracts (futures, options etc.) and today they bought 100 or they normally buy 100 shares and today it was 1,000. When asked why, they usually respond I don't know, I just did. I have personally seen it many times, an individual taking a position much larger than normal and not warranted under any circumstance. I call it "the big idea", the one that will finally set me free. What causes an otherwise good trader, to one day just violate all his rules and then repeat that same mistake time and again without ever learning? The root of the problem is almost always some form of self-deception and rationalization. 

"Under periods of inner stress…a person may become alienated from his real self. He will then shift the major part of his energies to the task of molding himself, by a rigid system of inner dictates, into a being of absolute perfection. For nothing short of godlike perfection can fulfill his idealized image of himself and satisfy his pride in the exalted attributes that he has, could have, or should have." Dr. Karen Horney (1885-1952) Neurosis and Human Growth).


The result is an ever-widening system of falsehood and evasions that take people further and further away from being able to identify and live with the truth. Therefore in the example above most often you will find they failed to ask themselves a vital question: what happens if I am wrong--very wrong? In other words, they badly misjudged or even failed to consider the risks inherent in their decisions.


People base their decisions on perceptions as well as facts. They interpret facts and put them in context. Those interpretations and contexts are based on the decision-makers' belief systems, and psychological attitudes. The best way of finding these things out is to ask a series of probing questions. When making decisions ask yourself are you: analytical and quantitative i.e. an engineer or scientist, for example? Or are you intuitive and qualitative i.e. philosophers or psychologists? Are you an optimist or pessimist? Are you a systematic thinker, always looking at the interactions of units, or more linear, following events in sequence? Do you have any political bias? Do you see lurking conspiracies or do you accept the logic of historical accidents? Do your own ambitions and biases blind you, or are you eager to learn? Are you susceptible to herd mentality? These kinds of questions help account for the idiosyncrasies of decision-makers and thus build the necessary foundations for developing good decision-making scenarios.

These subtleties often give rise to the gigantic illusion called false pride that hinders many traders. These concepts are so active in trading and in our society that understanding them will prove crucial in gaining self-awareness the first step in personal growth and change, especially for traders.

Friday, April 22, 2016

The Essence of Trading

Trading is very competitive and you have to
 
be able to handle getting your butt kicked. 
Paul Tudor Jones
To a large extent, the Prudent Trader web-site, like most others that deal with the markets, concentrate on the intellectual sphere: all the things we can know and understand with our mind. We concern ourselves with concrete, rational, and scientific ideas, the ideas of technical and fundamental analysis, economic principles, and trading strategies. For sure, these tools, and the mental ability to apply them intelligently are absolutely essential to success as a trader, investor, or a speculator. But success as a whole, as a human being, takes more than a good brain. It also takes character!

Webster's dictionary defines character as "the complex of mental and ethical traits marking a person." Ethics are evident in the code of values that guide a person's actions and choices. Do you choose honesty over lying, integrity rather than hypocrisy, productiveness over idleness? The process of making choices and decisions may be intuitive and hard to explain, but it always begins with your own personal sense of morality and ethics - your character.

Personality on the other hand, again from Webster's: "(1) the complex of characteristics that distinguishes an individual; (2) the totality of an individual's behavioral and emotional tendencies; (3) the organization of the individual's distinguishing character traits, attitudes or habits; (4) their disposition."

The reason trading is difficult, is that you cannot lie, hide, or rationalize failure. Reality is what it is. In most, if not all other profession's failure can be rationalized. A lawyer might say he had no case, a doctor might say he did all he could it was "in the hands of God", but in both cases they get paid. However at the end of a trader/investors report period, be it a day, a month, or a year he will either show plus or minus capital. There are no excuses, traders don't get paid for failure.

"The symbol of all relationships among (rational) men, the moral symbol of respect for
human beings, is the trader. We, who live by values, not by loot, are traders, both in matter and in spirit. A trader is a man who earns what he gets and does not give or take the undeserved. A trader does not ask to be paid for his failures, nor does he ask to be loved for his flaws." Ayn Rand, The Ayn Rand Lexicon (New York: Meridian, 1988)

This is the essence of trading. Understand it, accept it, or pass on this profession!