Hot Features
Premium
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
LEARN FROM GENERALS OF THE MARKETS – PART 14
“Profits take care of themselves (hold that thought though), losses never do.” – Dirk Vandycke
Born in August 7, 1946, in Netherlands, Edward Seykota attended a high school in Den Haag. His family migrated to the USA later, where he learned some lessons about the markets from his father. He got to know Richard Donchian, and he read an article from him. He developed interest in the markets, started various market-related careers, and had a series of experiences. He developed the earliest auto trading strategies. According to one source, Ed increased the capital of his clients by 250 000% between 1972 and 1988. He achieved this with relatively simple trading systems. Ed Seykota always stuck to the systems through all ups and downs of the markets. During this period and thereafter, he braved the uncertainty of the markets triumphantly. His website is Seykota.com.
Lesson
Ed Seykota declared that the biggest secret about success is that there isn’t any big secret about it. The most robust strategies in the markets are the simplest strategies. I’m a witness to this fact. Complicated trading systems can’t be profitable in the long run without the components below.
1. Ride your winners! Ed is a trend-follower.
2. Cut your losses! You should know when you’d go out of the market if a position is going against you.
3. Manage your risk! Only market wizards that can mange risk adroitly can expect to enjoy happy and permanently successful career.
4. Use stops! Stop loss is one of the basic risk control tools. It’s our life insurance policy in the markets.
5. Stick to the system! When you’ve a trading system that works, stick to it. You should know when the strategy works and when it doesn’t. You should know when you’ve to trade and when you shouldn’t.
6. File the news! That has to do with fundamentals, and it pays to pay attention to that.
Conclusion: You should always remember that the future is uncertain, knowing your limitations and being aware that you can’t control the market prices. It pays to realize that you can’t be sure of the next direction of the markets, yet you can control what happens to your account. You’re the master of your fate in the markets. While the market movement is out of your control, the losses and profits in your account are within your control.
This article is concluded with some quotes from Ed:
(a). “Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money… Fundamentalists and anticipators may have difficulties with risk control because a trade keeps looking ‘better’ the more it goes against them.”
(b). “John (Bollinger) tells me audiences can sit for hours and listen to him describe his famous, and simple, equation. They cannot, however, stand to listen to advice about risk management or sticking with a system.”
(c). “Embracing the moment, celebrating the pain, and finding the positive intention, tends to transform pain into wisdom. Trying to avoid the bad stuff only tends to institutionalize it, and miss it’s positive intention.”
