The 4th Session: 5 Absolute Rules to Become a Winning Trader + The Timing for Breaking Those Rules
Episode 4: Ed Seykota
■ Cut losses quickly, let profits run, keep positions small, follow the rules without hesitation, know when to change the rules
This phrase wasn’t spoken by ordinary traders or businesspeople.
Do you know a trader namedEd Seykota?
(Source: http://www.azquotes.com/)
He started at a major brokerage firm and
developed a useful trading system, but
management interference led him to become independent.Independent.
Since becoming independent,
a $5,000 start in 1972 grew to
over 250,000% after 16 years in 1988.
By the way, he has a degree from MIT, so
he’s not relying on luck alone.
He holds several beliefs about trading,
and there are quotes that can help ordinary investors.
■ 1. Cut losses quickly 2. Let profits run 3. Keep positions small 4. Follow the rules without hesitation 5. Know when to change the rules.
The first three rules are easy to understand.
What’s concerning are 4 and 5.
4 and 5 meanto mostly follow the rules while constantly studying the market
to discover better rules and
to replace rules as appropriate.
By the wayEd Seykota left more famous quotes as well.
This is his answer to a question from an interviewer.
Q: What is the most important advice you would give to an ordinary trader?
■ Might be an answer that’s a bit too honest..
That he should find a superior trader to do his trading for him, and then go find something he really loves to do.
When translated into Japanese
「彼は優秀なトレーダーにトレードしてもらい、
何か他のすべきことを見つけなさい」
That's what it means.
It essentially means ordinary traders should stop trading.
Perhaps because they think they won’t be able to win anyway.
One more quote to share.
■Everyone gets what they want from the market
This is a very powerful mindset.
What it means is that,
whether a winning trader or a losing trader,
they are getting what they want.
Winning traders get money, right?
Losing traders lose money, right?
You might think so, but
they gain a distorted sense of self-worth, pride,
and a belief that they are right and the market is wrong.
In other words, they value self-esteem over market reality.
In short, they are getting a sense of self-importance from the market.
In exchange, they lose money.
What would you like to get from the market?
This column cannot present specific tools or trading methods, but
if you ask questions or inquiries on the blog, you can find useful information.
Writer:Yusuke KurodaProfile: FX information product trader. While working as a salaryman, he used FX and binary options to become free from money worries.
Blog:FX Information Product Trader — Verification Review Site
