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.
- Ride your winners! Ed is a
trend-follower.
- Cut your losses! You
should know when you’d go out of the market if a position is going against
you.
- Manage your risk! Only
market wizards that can mange risk adroitly can expect to enjoy happy and
permanently successful career.
- Use stops! Stop loss is
one of the basic risk control tools. It’s our life insurance policy in the
markets.
- 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.
- 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.”
Azeez Mustapha
Market Analyst, Trading Signals Provider and Coach
Copyright (C) ADVFN PLC
For more articles, go to: http://www.advfn.com/newspaper/authors/azeez-mustapha
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