LEARN FROM THE GENERALS OF THE MARKETS - PART 53
"You need to get comfortable with losing money, or
you will never make money." - Chris Tate
Michael Marcus is a professional trader. He went to Johns
Hopkins and studied Psychology at Clark University. He started speculating on
the markets in the year 1972. His first trade was successful, though that might
be out of pure luck. In 1973, his portfolio that was initially worth
twenty-four thousand US dollars was increased to sixty-four thousand US
dollars. In fact, he’s said to have turned his portfolio from thirty thousand
US dollars into eighty million US dollars.
Michael has worked for many trading firms in various
capacities. His investment strategies are unique and the trading instruments he
chooses are well-known and traded in well-planned ways. He’s also a technical
analyst. He’s featured in a book titled: “The Predictors: How a Band of
Maverick Physicists Used Chaos Theory to Trade Their Way to a Fortune on Wall
Street.” He was reported to have been an ardent follower of the Maharishi Mahesh
Yogi.
Lessons
These are some of the lessons that can be learned from
Michael:
1. Although
Michael is today viewed as a legendary trader, he started as a noob who had
initial challenges in the markets. You may be a noob today, but that shouldn’t
prevent you from becoming a legendary trader in future.
2. When Michael
was having challenges, he was mentored by Ed Seykota (a market wizard). Ed’s
help and guidance made Michael a better trader. He was also taught money
management. Do you find it difficult to be a successful trader? You might want
to find a mentor who’s a successful trader cum talented coach. You might be
surprised. Michael himself is now a mentor to professional traders.
3. There’s life
outside trading. Don’t be a market addict – to the detriment of your spiritual,
social, parental, connubial etc. health. That’s what affected Jesse Livermore;
the end of his life was worse. Michael was once making this kind of mistake. He
was married to his screen and checked the market actions now and then, even at
night. According to him, that was a factor that contributed to the collapse of
his first marriage. He says: “If trading is your life, it is a torturous kind
of excitement. But if you are keeping your life in balance, then it is fun. All
the successful traders I’ve seen that lasted in the business sooner or later
got to that point. They have a balanced life; they have fun outside of trading.
You can’t sustain it if you don’t have some other focus. Eventually, you wind
up over trading or getting excessively disturbed about temporary failures.”
This is a great lesson.
4. It’s better
to trades the markets that you understand very well and which you’re
comfortable with. Stay out of
equilibrium markets, volatile markets, choppy and unpredictable markets. Trade
only the markets that are easy to predict; the markets that you know very well.
If you’re only familiar with Forex markets, you’d have difficulty making money
from trading futures. Stay out of irrational and insane markets and court sexy
and trending markets. This is one way to increase the odds in your favor.
5. As it is
said before, money management is very important. This is one of Michael’
formulas for lasting survival in the markets. You can survive protracted losing
streaks only when you risk a small amount per trade. When winning streaks come
around, the losses are then recovered. By risking too much per trade, there’s
no way you can survive long in the markets; which means you won’t be able to
recover your losses and you’ll stop trading. The best trading technique has
losing streaks at times. With money management, you can avoid a margin call.
6. We become
better at trading only when we embrace losses and learn lessons from them. The
lessons can change us for the better and revolutionize our trading approaches.
Great traders don’t think they’ll always win – that’s impossible. We don’t make
progress when we blame the markets. We make progress when we learn from our
mistakes.
7. There are
many ways to make money without being active on the markets. This may be
through funds management accounts, social trading or signals strategy services.
However, if you want to be a trader, you need to learn how to trade, including
the trading approaches that fit your psychology. You need to discover the type
of trader you are and what works for you.
Conclusion: A
good trader would eventually recover the recent loss she/he suffered. For
examples, good funds managers have made gains that more than compensate for the
negativity they experienced during the recent financial crises (some even made
gains during the crises). It is also important to know which markets and
currency trading instruments are favorable to your trading style. You need to
begin to acquire the skills necessary to make you a victorious speculator.
Should you fail to do this, you’d discover that you’re still a novice in
several years to come, just as you’re now.
This article is ended with a quote from Michael:
“Perhaps the most important rule is to hold on to your
winners and cut your losers. Both are equally important. If you don’t stay with
your winners, you are not going to be able to pay for the losers.”
Source: www.tallinex.com
Learn from the Generals of the Markets: Market Generals
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