# Trading To Win. The Psychology Of Mastering The Markets (Pdf)

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## Trading To Win. The Psychology Of Mastering The Markets (Pdf)

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If you want to learn how to be a super-trader, then closely examine the concepts in this book. It is based on a proactive trading program that has helped my firm, SAC Capital Management, LLC, grow from a $20- million hedge fund to one handling over$500 million annually after only five years. I have been trading the stock market for twenty years. Originally, I made my trading decisions by watching the ebbs and flows of the ticker tape. I knew very little of the fundamentals of the companies I was trad- ing and based my decisions on the tape action. Later, as I refined my art, I began...

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## Nội dung Text: Trading To Win. The Psychology Of Mastering The Markets (Pdf)

3. Foreword If you want to learn how to be a super-trader, then closely examine the concepts in this book. It is based on a proactive trading program that has helped my firm, SAC Capital Management, LLC, grow from a $20- million hedge fund to one handling over$500 million annually after only five years. I have been trading the stock market for twenty years. Originally, I made my trading decisions by watching the ebbs and flows of the ticker tape. I knew very little of the fundamentals of the companies I was trad- ing and based my decisions on the tape action. Later, as I refined my art, I began to combine it with a deeper understanding of the funda- mentals of the underlying companies, the industries, and the general market trends. I have worked with and met many traders in my life. Most combine some form of chart reading, tape analysis, and/or fundamental analysis to make their decisions. The super-traders, though, share certain com- mon traits that supersede whatever discipline they might pursue. They are totally committed to their own particular style and demonstrate complete conviction when trading. Because of this conviction they are able to take large financial risks and have the confidence and belief that probability is on their side. They also have the ability to admit their mis- takes and minimize their consequences—that is, losses—when they are wrong. They are independent and think for themselves; they are not easily influenced by others. Most traders, surprisingly, are not like that: They are indecisive, lack conviction, and are afraid of taking risks and making mistakes. They are unaware of the personal demons that are holding them back from true success.
5. Xll Contents PART THREE Mastering the Trading Game Chapter 10 Dealing with Stress 187 Chapter 11 Overcoming Common Mistakes 197 Chapter 12 The Power to Change 223 Trading to Win Index 249
10. T R A D I N G TO W I N Introduction 7 Losses are always hidden in your P&L. It looks like you're making The Unique Value of This Book some money, even though if you look closely you lost a lot of money, and that costs slippage and opportunity as well. Start looking at how The special value of this book is that it can teach you to recognize the much people are not making because they're scalping on the way up. psychodynamic underpinnings of your work (your subconscious per- Let's say a trader scalps—sells for a quick profit—and makes $5 million. ceptions and how they influence your trading), how to change your Maybe if he didn't scalp, he could make$10 million. The issue is track- perceptions, and, finally, what self-observation techniques you can use ing where the stocks go after you get out. to redesign your responses. What if you're ahead at the end of a day, and you say, "The hell with Stay with me for a bit, and you'll learn to observe yourself. You'll it, I did well. Why should I look?" detect the moment you make the wrong decision. You'll discover how Hindsight, you argue, is twenty-twenty. You're right. But I think to stop yourself when you know you are gambling or relying on hope. you can learn from your past experiences. It's like athletes reviewing re- You'll learn to rely on your own ability to read the tape and understand cent game films to see what they are doing, so as to improve the way the significance of known market indicators and the knowledge about they win. Granted, the best thing would be to be right there at the specific companies. You'll learn to perceive your stress and learn to trust time. I'm merely trying to make you aware of your thoughts, in order your insight, intuition, and decisions, while relying less on others. You to give you a chance to change your thinking. will learn to take stock, review the basics, clean up your positions, and Go ahead: Resist this idea. Argue that when you're in the middle of reduce them so you concentrate on getting the right kind of informa- a loss, you're thinking about how to limit it, or how to get some back. tion to make sound judgments. Argue that you're as good as your next trade, not that you're as good as This book will teach you how to let go of losers and overcome your your last trade. If your past behavior has been successful, you ought to reluctance to admit that you have made a mistake. This applies to buy- repeat it. If it's not successful, you won't repeat it. ing high and selling low. It applies to adding to positions that are not This all sounds fine, but these rationales ignore a basic characteristic profitable or are losing money, averaging up on short sales that are ris- of human beings—we tend to remain at the same level and repeat the ing, and averaging down on longs that are dropping. In doing this you past. Only if we are aware of the sources of our behavior will we be in a will be able to control your efforts to retrieve what you have lost. You'll position to change it. learn not to fight the trend of the market by buying a stock when it's Keep on resisting. Argue that people usually progress to the next down, tricking yourself into thinking it's a bargain. level of trading, and that either they're going to make it and continue It also applies to cashing in winners too soon—scalping. You might to grow or they're not going to make it. Assert that they will grow from think you want to avoid looking bad, and you don't trust your instincts. experience by taking some losses but being right a lot of the time, and You might want to get a quick profit to look good. Instead you'll learn that there are no hard-and-fast rules because if there were you probably trust, patience, and your ability to get out later on. could have retired a long time ago. Point to the hotshots at your firm You'll learn to trade in terms of the amount of money you have, and who have had a tremendous run in the past fifteen years and have con- in terms of the kinds of percentages of profits you want to produce. sistently done better on a year-to-year basis. You'll discover how to balance your expanded objectives against your I believe that most people are not inclined to look inward, but pre- available assets. As a by-product, you'll ascertain careful money man- fer to live in the land of denial and rationalization. And I take the posi- agement, so you preserve capital for when you need it—winning oppor- tion that learning the fundamentals of trading success requires much tunities. more self-examination. I believe that the more consciousness you bring How could a professional trader run into the same stumbling blocks to this process, the more successful you will be. as the amateur weekend trader? Well, he (or she) may know more