Market Philosophy – Cautionary Suggestions Continued
The two elements vital to success in the markets are: (1) Knowledge of the principles taught in this Course and (2) Ability to apply these principles correctly. A famous operator, Dixon G. Watts, expressed the idea many years ago by saying that the qualities essential to the equipment of a speculator (and an investor) are: Judgment, self-reliance, courage, prudence and pliability.
To these should be added another quality, patience. In brief, rigid self-control is half the battle.
We can train you to develop good judgment, but you must train yourself to act upon your decisions and to carry them to a successful conclusion. By this is meant that you must operate with no emotion’s whatever. Be just as indifferent, hard boiled and level headed in opening and closing actual commitments as you would if they were merely paper trades. You can do this if you will be honest with yourself. Make a searching analysis of your own mental processes. Study your psychological shortcomings. To know them is to beat them. If you find you do not possess courage, self-reliance, patience, prudence and pliability, cultivate those qualities. It is folly to be in the market without them.
When you make a commitment, your attitude should be that it is just an ordinary business transaction involving risks common to any other business venture. If it turns out profitably, well and good. If it results in loss, no serious harm will be done because you have limited your risk with a stop order; and you know in advance that no business can be conducted without occasional setbacks, so you are prepared to accept them philosophically.
Thus you will waste no time regretting losses or lost opportunities. The only value of a mistake is the lesson it may teach. Hence the only thought you will give to your errors will be studying the reasons, for them. Regrets can teach you nothing but they can produce a great deal of mental anguish which will upset your self-control.
Once you have acquired complete control of your emotions, you will, he surprised to find how greatly that strengthens your, judgment. The better your judgment, the greater will be your confidence in yourself and your contempt for the opinions of others. Right here let us caution you to remember that another vital element in your success will be your ability to play a lone hand.
Decisions arrived at by committees or groups are no better than the worst opinion of the weakest thinker of the lot. It is a peculiar fact, in the Cryptocurrency market at least, that a loud mouth goes with a lame brain, but leather lungs sway more people than sound logic. That statement may seem harsh, but you will recognize its truth later if you do not see it now.
Neither should you seek confirmation of your decisions by consulting others whom you may regard as experts, unless you are positive they speak the same language as you, that is, understand and follow the same principles. Even then, be careful. One person may see the market with the eyes of an investor, another through the eyes of the day-to-day trader. You may consult both and get conflicting opinions, each of which is sound for that particular individual’s requirements, but not for your purpose. Again, you may have made a close study of a certain Cryptocurrency. You ask another, who knows little about its behavior because he; has not followed it, what he thinks. To be sociable he gives you an offhand opinion which throws you off balance. Result: You take a loss or miss an opportunity. In fact, we know of cases where two equally skilled operators have had diametrically opposed positions at the same time, one long, the other short, in different Cryptocurrencies of course. Both made profits. But had they compared notes, consulting each other for an opinion on the market, the outcome would have been confusion, hence opportunity lost and mental poise upset. Therefore, make it your practice to draw your own conclusions and keep them to yourself.
A Cryptocurrency market operator must be as hard boiled as a five-minute egg; cold blooded as a fish; deaf to all gossip; blind to news; and dumb as a door knob when it comes to discussing the market with others.
Capital and Courage are two things necessary before you begin actual trading. You must have capital and you must have the courage to act on your own decisions.
As you continue your study and practice, you will gain confidence and this should give you the necessary nerve when you see an opportunity. If at any time you find yourself powerless to move because you haven’t the nerve to trade, make your trades on paper; but only until your confidence returns. Better still, take a vacation from the market. Do nothing for some days or weeks. When you return to it, you will find your judgment improved.
Prudence. Do not let successes lead you to trade in unduly large amounts in proportion to your capital. If you have $10,000 available, see what you can do by venturing not more than $1,000 in a series of trades in small amounts of Cryptocurrency. Do not touch the other $9,000 until you have proven whether or not you have been successful with the $1,000. If you should lose the $1,000, try again with the next $l,000; do not use all the rest of it.
It is a good plan to have a column in your record of transactions in which you enter the causes of any losses that occur. Study these. This will aid you toward success.
Your transactions may be small at first but this start is very important to you. “As the twig is bent, the tree’s inclined.”
Suppress all anxiety to make a lot of money. Do not aim to make a killing; try rather to realize a consistent return on your capital — 20% to 45% or more per annum is not an unreasonable goal. You will be surprised how rapidly you can build if you do not aim too high at the start. Concentrate upon learning to play the game — not the way it is played by the public but by the professionals.
Play it, not like an outsider, but an insider. Try to get the big fellow’s point of view. Reason out what you would do if you were in his place. If you were trying to buy you would force the price down as low as you could. When it came time for you to sell, you would spread bullish tips and print optimistic news items through your press agent in order to induce other people to buy; thus you would create a good market on which to sell. That is the game as the large operator plays it, and when you understand how he works and you, trace his movements on your charts, you are making him work for you and profiting by his efforts. Thus you continually increase your chances to win.
Never risk any more money than you can afford to lose.
If you use money that you cannot afford to risk, your judgment will be warped. Fear of loss will cause you to use bad judgment. Hope that you will make a profit will cause you to hang on when you should close out.
Pliability. If you cannot act without hope or fear; if you cannot trade without having your judgment distorted by these factors, wait until you have a certain amount of money that you can afford to risk and the time to devote to the market. Then you can be calm, cool and collected. By practicing on paper meantime, you can further prepare yourself for your real campaigns.
When in doubt, get out! Nothing clarifies the mind more than to be in a neutral position — out of the market. The reason: An investor or trader is biased by his open trades. If he is long, he thinks his Cryptocurrencies should rise because he is long; his hope often overbalances his judgment. If he is short he often fears that a rally will catch his stop orders. The late great Jesse Livermore says: “Instead of hoping, he must fear; instead of fearing, he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit. It is absolutely wrong to gamble the way the average man does.”
Whenever you find hope or fear warping your judgment, close out all your positions at the market price, regardless of whether you have a profit or a loss. Then keep out of the market a few days, a week or longer — until you feel that you can go back again and be guided by your judgment instead of your hopes and fears. These two emotions are the cause of many failures in any type of trading.
Until you can learn to trade and invest without hope or fear you will not meet with all the success you should.
Prospective Profits. Do not fix your mind upon any stated amount of profit that you hope to make on any commitment. Your chart will indicate the possibilities before you enter your order. Never say you will make twenty points out of this Cryptocurrency, because such an expression is merely registering hope, it may lead you to hang on too long. The market situation is changing constantly. Before you have been in a commitment twenty-four hours there may be reasons why you should not only close it out, but reverse your position. You must be so flexible that you can turn readily according to your indications.
Never pit your judgment against that of the market. Today’s trading trend may be one thing and tomorrow’s another. The thing to cultivate is ability to sense and to follow a trading trend whichever way it leads.
Patience. If you find that you have been taking five point profits when you might have had ten or twenty points in several cases, it is probably due to lack of patience. Your charts will show that you should not have gotten out when you did; that you should have waited until you had definite indications that your coin had completed its swing and was ready for a reverse movement.
Patience is an indispensable factor in the market: Patience to wait for opportunities; to see them develop; to wait for a substantial profit. Livermore said he became a big and successful trader only when he learned to hold his position through rallies or reactions until he had sound reasons for closing his trades.
Don’t be in a hurry to get into the market simply because you have surplus cash available. Wait until you see a real opportunity.
Likewise, once you have made up your mind that the market is topping out don’t be in a hurry to climb back into a cryptocurrency out of which you have just taken a substantial profit. What if it does go a few points higher? Let the other fellow gamble for the last eighth. Chances are you can buy it back again, if it acts right, at lower prices than you sold even if you have to wait six months or a year.
Have patience to wait out a situation until you see it is ripe for an aggressive move. Then act promptly. Do not debate whether it would be better to wait for positive proof of the correctness of your decision. By the time you are 100% certain, the move will have started and your opportunity slipped away. If this does happen, don’t make the mistake of running after the move which has escaped you, for in that case your judgment is consciously or unconsciously biased by your first error and chances are you will not thereafter act with a clear mind. It is best to say: The higher it goes the less I want that Cryptocurrency (if you were bullish), or: The lower it goes the less I want to sell it short (if you were bearish); so I’ll just look around for the next opportunity.
Never get the idea that you must be in the market all of the time. In fact, it is a good plan to operate so that your funds will be completely liquid at intervals and your position neutral. The purpose of this is to prevent you from going stale; to keep a fresh, clear perspective.
Never make a commitment in any cryptocurrency unless and until you have made a thorough study of its position, its background and present behavior. If you have no charts of that coin, make them before you go ahead.
Do not go into a cryptocurrency merely because you think it may be good; or because you “hear something good (or bad)” about it; or a friend has been advised to buy.
Self-reliance. NEVER ASK ANYONE ELSE what he advises you to do or whether he approves of what you plan to do. Form your own opinion. Try to make it so accurate that you will gain more and more confidence in it. Learn to have no respect for anyone’s else opinion but your own. If you follow anyone else, your own judgment will weaken and that is the opposite of what it should do. By constantly cultivating a more accurate judgment, you will continually add to your earning power.
When you ask another person what he thinks, or which cryptocurrency he believes best to buy or sell, you are taking his judgment or mixing his judgment with your own. In most cases, his opinion is nothing more than a guess. Your opinion can be based on facts, as shown on the tape, or on your charts. It will become more and more sound as you practice the rules herein suggested. Study, practice, trade and develop your judgment, your foresight and your self-reliance. New students especially should not ask someone: “What’s the market doing?” That leads him to express an opinion and immediately the student’s judgment is biased.
Do not mix fundamentals; statistics; opinions, formed from newspaper headlines concerning domestic or world political conditions, or conversations with your friends on social media, your broker or business associates with technical conditions. To do so will distort your perspective and impair your judgment.
Do not judge the market by what you see from occasional glimpses at the tape. In the first place, unless you are an active trader and able to devote five hours a day to reading the tape continuously, you should not look at the cryptocurrency ticker at all.
Take care that you do not confuse minor swing with intermediate trend indications, nor short swing trading with trading or investing for the long moves. If you make a trade for say a five point move on the basis of tape indications, you must close out that trade on tape indications. On the other hand, if you take a position for a possible 10 to 15 point move on the basis of your chart indications, close it out on what the chart shows. If you confuse the two you are sure to be whipsawed. That is, you will always be jumping in on bulges and out on reactions.
Above all, DO NOT MIX YOUR METHODS.
Occasionally we find a new student who is endeavoring to combine this Instruction with all or part of other ideas and theories (particularly some of the popular, new day “studies” of geometrical chart “patterns”) which he has previously acquired. It is sheer folly to suppose that you can hope to discover any easy short cuts to practical market operations. The very nature of the art is such that it cannot be reduced to a basis of rigid formulas functioning along mechanical or mathematical lines. In short, you cannot solve your market problems with a calculating machine.
Our experience shows that those who set aside all other methods, ideas and theories secure the best results. One case was like this: A student correctly forecast a rise in the market and accurately indicated the number of points that a group of leading Cryptocurrencies should advance. But when the rise was only half over he decided that the market should decline and not only sold out his long Cryptocurrencies but went short at that point. Result: He missed about half the advance, operating contrary to the trend as indicated by our teachings. He not only lost money but he lost an opportunity to get out of his Cryptocurrencies at the clearly indicated tops and to make a handsome profit on the short side in the decline which followed.
Those students who have nothing to unlearn make the most rapid progress because they follow the Course 100% and soon find themselves on a paying basis. Therefore, we hope you will not mix our Instruction with any other for the above and the following reasons: It is practical, being founded, upon principles employed by real operators, men who have had professional experience and not merely smatterings of beautiful theories picked up as market letter writers, statisticians and self-styled “experts.” It is complete in itself. It covers all your requirements in all phases of the market. It has been tested in all kinds of markets through more than quarter of a century, in fact, the underlying principles of this Course are as old as the market itself. It has made a great deal of money for many thousands of people trading stocks and commodities. It will not stand mixing with any other so-called method; to do this is like going to two doctors, getting their prescriptions mixing the two together in one battle and taking a dose in the hope that it will cure you. You really should give one doctor a fair chance by taking his medicine when and as prescribed. Indeed, we claim that, unless you learn and apply this Instruction, you had better quit the market and stick to a business or a profession which you do understand.
Do not be impatient to begin trading or to get results. Lay a strong foundation for your future by understanding thoroughly before you make even a single paper trade. Continue your paper trading long enough to be certain of your judgment before you venture a dollar.
In some instances, students start trading on some feature of the Course before they have even read it through once. In fairness to themselves and to us they should follow instructions. These are: Read, study and learn the Method. Practice on paper until you are proficient. Then begin trading in small lots.
We asked one subscriber who is a doctor and who insisted upon trading almost immediately, “How long did you study medicine before you actually began to practice?”, “Five years,” replied the doctor. “Then would it be too much if we requested, for your own good, that you study the Course for three months before you make your next trade?”. “That seems quite reasonable,” he admitted.
IMPORTANT POINTS
1. The two chief ingredients to success in the cryptocurrency market are: a. the knowledge of the proper principles
b. the ability to apply those principles
2. Above all: show good judgement, self-reliance, courage, prudence, pliability, and last but not least, patience for successful trading in the market.
3. Control your emotions.
4. Capital and courage are necessary for actual trading.
5. Show prudence – do not trade in unduly large sums of money.
6. When in doubt: get out of the Cryptocurrency market.
7. Let your charts indicate what your profits should be.
8. Wait for the best opportunities before investing.
9. Never make a commitment until you have made a thorough study of the position, background, and present behavior of a given
coin.
10. Do not ask others for advice, nor should you occasionally scan the ticker tape for guidance to determine the action of the Cryptocurrency market.
11. Do not mix the principles of the Wyckoff Course with other theories of market analysis.
