LEARN
FROM GENERALS OF THE MARKETS - PART 11
"My philosophy is that all stocks are
bad. There are no good stocks unless they go up in price. If they go down
instead, you have to cut your losses fast... Letting losses run is the most
serious mistake made by most investors." - William
O'Neil
Peter and Serge Milman live in New York. A few years ago,
they, with other traders managed only their own money as a proprietary trading
group. But now, they manage a hedge fund for their investors. The most
impressive thing about Milman brothers is their track record in terms of annual
returns. They’ve succeeded in beating the markets on annual basis and this has
been going on for many years. The track record, which was made public on their
former website may, unfortunately, not be accessed by anyone who’s not a
registered member at their new website (MilmanCapital.com). The story of their
trading career is quite interesting, and more about them can be found in
TRADERS’ issue of June 2010 (Tradersonline-mag.com). Some of their quotes are
shown below.
Lesson
There are
great lessons to be learned from Peter and Serge Milman. Some of them are
these:
1. Beginner traders are bound to make
errors. But once you comprehend the reasons behind your poor performance in the
markets, you’ll improve and move towards competence in trading. Just make sure
you don’t repeat your trading errors.
2. If the markets
aren’t doing great, you mayn’t trade at that time. At times, the most desirable
position is to stay out of the markets. Speculation is a game of patience. You
require patience, patience, patience.
3. Trading is no
science, because nothing can be guaranteed. Yet if you could find a trading
setup that works constantly for you, you need to take it as your edge in the
markets.
4. Finding the stocks
that are hot right now is the key to profitable trading. Since you can’t see
everything in the market yourself, you’ll benefit yourself by belonging to a
group of successful traders. Trading experts belong to great groups.
5. Peter tries never to
chase and always waits for levels to show themselves. This really limits his
bad trades and if a stock starts going thru a level he likes, generally he
likes to play, lets it ride unless it gets back to his price. This is called a
retest and they’re very dangerous. At a point of retest he generally limits his
risk.
6. He also advised that
if people can’t get employed at a hedge fund or prop trading firm, and are
forced to trade their own money, then it’s recommended that they’ve enough
savings to live two years without any stress. That’s generally how long it
takes to know if you should continue trading as a career choice. For anyone can
make money any given day, but to be consistent, that’s the hard part - to cut your
losses quickly, to let your winners ride, to not get trapped in bad positions,
to trade only if you’ve great reasons, etc.
7. When you’ve open
positions, remember that you’re at the mercy of the market and you must have
your stop losses set.
Conclusion:
Actually, we needn’t know everything in the world of trading before we can find
nice setups or profitable entry levels. We showcase perfectionism when we feel
that our prediction or decision in the markets must be valid or correct.
Therefore, when an observation is made in the markets, we prefer it to
transpire as we think. Whenever there’s a bias, we’d want to find all evidence
and information that support the bias. Believe me, we’ll always find evidence
to support our views, even if the markets prove us wrong.
This article is concluded by some quotes from
Milmans:
“…The upshot is that I get to recoup all my losses and still
make a significant profit.” - Serge
“It was the wildest
back then and I only wish I knew then what I know now. I’ve become a technical
addict, a charting expert. They reveal the secrets of the stock market.”
- Peter
Azeez Mustapha
Market Analyst, Trading Signals Provider and Coach
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For more articles, go to: http://www.advfn.com/newspaper/authors/azeez-mustapha
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