Quotes from Reminiscences of a Stock Operator

I did precisely the wrong thing.  The cotton showed me a loss and I kept it.  The wheat showed me a profit and I sold it out.  Of all the speculative blunders there are few greater than trying to average a losing game.  Always sell what shows you a loss and keep what shows you a profit.

If all I have is ten dollars and I risk it, I am much braver than when I risk a million if I have another million salted away.

I’ve got friends, of course, but my business has always been the same – a one-man affair.  That is why I have always played a lone hand.

What beat me was not having brains enough to stick to my own game – that is, to play the market only when I was satisfied that precedents favoured my play.  There is the plain fool, who does the wrong thing at all times everywhere, but there is also the Wall Street fool, who thinks he must trade all the time.  No man can have adequate reasons for buying or selling stocks daily – or sufficient knowledge to make his play an intelligent play.

It happened just as I figured.  The traders hammered the stocks in which they figured would uncover the most stops, and sure enough, prices slid off.

For one thing, the automatic closing out of your trade when the margin reached the exhaustion point was the best kind of stop-loss order.

The game taught me the game.  And it didn’t spare me rod while teaching.

How to Keep A Trading Journal

This is a must for serious traders out there...

Here are a few basic notes you should put in when doing your trades. Just document your trading activities...

1. Market Conditions - Just note volatility, trends, etc...

2. Entry Reason, Time and Price - Without a reason, you shouldn't be in that trade.

3. Exit Reason, Time and Price - Same. No reason, don't trade at all.

4. Long or Short Trade - Mostly this is long for the Philippine Stock Exchange. Short trading isn't allowed. But for other markets, please indicate whether you  went in long or short.

5. Conditions during the Trade - What happened to the market during the trade? Was it favorable or not to your trade? Write it down.

6. Money Management -Write your position sizing, etc..

7. Chart Attachment - Attach the charts you used when you made the decisions.

8. Day's Weaknesses - Recognize the patterns in the day that made things hard for you. Where there a lot of distractions that kept you from trading properly?

9. Day's Strengths - Recognize the patterns that made things work for you. What made you focus etc.. that made you do well?

10. Any other thoughts - Place anything you feel is worth noting.