61). We’re able to take many, many small losses, without flinching.
62). Only that sets us up for the big wins.
63). We don’t second guess our stops.
64). In fact, we want the stop to hit. As in, hit me, if you’ve got the *****.
65). When the trade moves in our direction, we let it. We’re doing other stuff.
66). When the trade moves against us, we let it. We’re doing other stuff.
67). That’s because we fully understand the function of our stop. It will take us out of the market, whether in loss or in profit. It’s dynamic, you see. It moves with the market as per the definition provided by us while punching in the trade.
68). We’re not afraid that our stop could be jumped. Can happen, in a panic. Hopefully, our technicals will have placed us in the right trade direction before huge and fast moves. It comes to mind that this kind of move occured at least twice in the last six years, once with the swiss franc, and once during Brexit. If we start worrying about such one-offs, we won’t trade at all.
69). We look at the technicals, and we listen to what they’re saying. The trend is our friend. We trade with the trend, either on fresh highs (fresh lows) or on pullbacks, depending upon the conditions.
70). This is trading, so I personally don’t look at fundamentals. However, cook your curry the way you like it.
71). We might zero into tradable underlyings with screens or searches, but…
72). …we eyeball into final trade selection.
73). Yes, the chart needs to look and feel just right. All but the one tradable entity are rejected by the look and feel of the chart. The one remaining is the one we trade. If none remains, we don’t trade.
74). Price is king. We’re into price action.
75). Indicators only indicate. Price does the talking.
76). What the price is saying will reflect in the indicator, but with a time-lag.
77). Do we want this time-lag? I don’t.
78). Thus, price action it is, for me. However, everyone is looking at the same price.
79). Therefore, we need to think slightly out of the box, to make money.
80). Edge + out of the box thinking + stamina nails it.
That’s what a small entry quantum approach demands of its player.
To be frank, I’ve not run any marathons on field and track.
However, I’ve done my share in life, and continue to do so.
If it’s not a marathon, I don’t get a kick.
If you’ve got that in yourself, you’re cut out for the small entry quantum approach.
Life in the background.
Going on and on…
…till you break through,…
…and the contents of your portfolio spill over…
…and start to show.
Might take a few decades.
Do you have it in you?
What will make you hold out?
Stick to the tenets of the small entry quantum approach, and you will not only hold out, but your folio will burgeon too.
Buy with surplus.
Buy with margin of safety.
Learn to sit.
Enter small. Many times.
Keep entering over the years, till there is reason to enter.
Exit on highs. Only get rid of those stocks you don’t feel like holding anymore.
No fear please. Kill it. Create the circumstances for fear to vanish.
No euphoria either. That’s a tough one, especially when the whole world is dancing around you.
Do your homework.
Don’t listen to anyone.
41). If it’s high, it could go higher.
42). If it’s low, it could go lower.
43). Market forces tire the trader.
44). Engulfment in loss and loss-freeze suck one out.
45). That’s exactly why we’re not going to let that happen. You know how. (Hint : stops).
46). Trade selection is the least of one’s problems. It’s no biggie.
47). Trade management separates winners from losers.
48). Proper trade exits are the icing on the cake.
49). Longs exiting in a rising market – hmmm – really?
50). Shorts exiting in a falling market – hmmm – really?
51). What’s that other fellow trading? Who cares?
52). How’s that other fellow doing? You got it. Who cares?
53). The only entity stopping you from outperformance – is you.
54). All your demons – are in you.
55). They’ll slowly come out, over the years, one by one, or some now, some later. Hopefully sooner than later.
56). Let them emerge, show their antics, and disappear forever. Make sure you bid them goodbye.
57). That’s why, you’re trading small, right, till your demons have emerged, created havoc, and then disappeared, forever?
58). You’ll feel it from inside, when it’s the right time to scale up. Develop this dialogue with yourself. A clear voice emerging from within can carry great advice.
59). Sure, you’re looking at trade signals, and sticking to trade rules. However, the voice from within is the net resultant per saldo vector of your entire trading experience. It carries weight.
60). Mostly, it doesn’t come. Clear the way for this voice to make itself heard when you need to listen to what it has to say. Trading, at first, is a bunch of rules. Later, trading becomes an art.
21). You started small, right?
22). Ultimately, you’re staying consistently in the green, correct?
23). Then it’s time to scale up. Slowly does it.
24). Why the whole spiel about starting small? You make your biggest mistakes in the first seven years.
25). Hopefully, you don’t repeat a mistake once it has happened, and once you’ve learnt from it.
26). However, mistakes are good, because they teach you. Nothing else can teach you with incorporation into DNA. Mistakes can.
27). No university can teach you. No books. No professor. Play the market, make the mistake, and learn.
28). A big break early in the markets is a recipe for disaster. More likely than not, you’ll blow up later, when it matters.
29). The best possible way to scale up is using position-sizing as delineated by Dr. Van Tharp.
30). The good thing about position-sizing is that it makes you scale down, when trading corpus goes below par.
31). Day trading takes up the day. You’re exhausted and are not able to do much else.
32). Short-term trading also keeps you riveted to the terminal, mostly.
33). However, position trading and longer time frames keep you in the line for whatever else you wish to achieve.
34). Market TV makes it a video game. Switch it off.
35). Trading with targets caps big-win potential.
36). When you trade, you trade. You don’t invest.
37). Successful trading means buying high and selling higher, or…
38). …selling low and buying back lower…
39). …as opposed to successful investing, which is buying low, not selling for the longest time, and then selling for a multiple.
40). Read points 16 to 19 again.
1). Put yourself out there. Again and again. Take the next trade.
2). Keep yourself in a position to take the next trade. How?
3). Take small losses. Have a stop in place. Always. Have the guts to have it in place physically.
4). Trade with money that doesn’t hurt you if it’s gone.
5). Don’t exhaust stamina. Put trade in place with smart stop that moves as per definition, and then forget it.
6). Keep yourself physically and mentally fit. Good health will make you take the next trade. Bad health won’t.
7). Have a system…
8). …with an edge, and even a slight edge will do.
9). Keep sharpening your system.
10). Don’t listen to anyone. You’ve got your system, remember? Sc#@w tips. God has given you a brain. Use it.
11). Let profit run. Don’t nip it in the bud. PLEASE.
12). A big profit doesn’t mean you’re it. It can become bigger. And bigger. Remember that.
13). What’s going to keep your account in the green over the long run are the big winning trades. LET THEM HAPPEN. How?
14). You exit when the market stops you out. Period. Your trailing stop on auto is fully capable of locking in big gains and then some.
15). Similarly, make the market make you enter. Entries are to be triggered by the market. Use trigger-entries on your platform.
16). When a trade is triggered, you’re done with it, till it’s stopped out, in profit or in loss. Can you follow that?
17). Your trade identification skills are going to improve over time. Get through that time without giving up.
18). Despair is bad, but euphoria is worse. Guard yourself against euphoria after a big win. Why?
19). Big wins are often followed by recklessness and deviations from one’s system that is already working. NO.
20). Use your common-sense. Is your calculator saying the right thing? Can this underlying be at that price? Keep asking questions that require common-sense to respond. Keep your common-sense awake.
We use them all the time.
A stock screen is a robot.
So why am I still saying no thank you?
I use stockscreens day in and day out.
I use them for trade selection, and I use them for long-term stock selection.
…(here comes the hammer),…
…the final say is mine.
I’d like the human touch to answer yes or no.
Also, out of say a hundred selections, I can still say no to all.
And, if something catches my eye, I can dig deeper.
I’d like to keep all these things in my hand.
I’d like my market approach to be with open eyes and usage of common-sense.
So where are we exactly?
Somewhere between one-fourth and half robotic.
That suits us.
We save hours of sweat labour.
After sweat labour has done its work, we start applying our minds.
We take over where the robot has left off.
…you find yourselves asking,…
…was that it?
Need I remind you, that this is very good indeed?
You want your strategy to become to streamlined, that it’s outright sheer damn boring.
That’s exactly when the strategy will perform.
Thrill-seekers have a video-game experience of the markets and then burn out.
You will go on and on with your boring strategy.
What does this mean for your time?
You’ve got something streamlined, so you’ve got time on your hands.
Twiddle your thumbs, or do something new.
I’ll take new.
I’d go for another strategy.
Approach another market.
Anything that attracts you.
Develop something in that market.
Make sure there’s no overlap between your markets.
When you wind up the day’s input for a market, you want to be exactly there, i.e. wound up with that market.
Entering the other market is something fresh for you.
You look forward to it.
Because of no overlap with something you’re done with for the day.
Slowly, get a few strategies going, such that your working day is taken care of.
This is how you proceed with a market.
And next market.
Once you’re done with a market for the day, only look at it the next day.
This way you’ll stay fresh, and your time and energy won’t be exhausted by hourly nitty-gritties.
Once done with all your markets for the day, do other stuff in life.
Like cultivation of hobbies, spending family-time, sport, meditation, chanting, reading, what have you.
Do full justice to life.
You’re learning to sit.
You buy with margin of safety.
You buy in small quanta,…
…and that’s why you’re always liquid,…
…to avail any opportunity that arises.
Yeah, there’s nothing impeding your liquidity…
…because you’ve kept yourself virus-free, i.e. debt-free.
You only buy quality…
…that’s going to be around for a long, long while,…
…because you don’t sell for a long, long while.
You don’t listen to what the grapevine is saying…
…because of the conviction and strength of your own research and opinion.
Yes, you regularly go against the crowd.
You either buy into debt-free-ness, or into managable debt that spurts growth.
Your input into the market doesn’t affect your daily life, leaving you tension-free to address your non-market world and thrive in it,…
…and that is why,…
…for all the above reasons,…
…your blockbuster gain story is going to happen,…
…and what’s more,…
…you are also enjoying the ride leading up to it.
The latest one doing the rounds…
…is the Bezos parents’ story.
Their investment in their son’s company twenty three years ago has returned a whopping twelve million percent, making them become worth billions.
You can have such a story too.
Identify pockets of value.
Invest in these pockets of value.
Money going in is something you don’t need to touch for a long, long time.
Build up a sizable investment in each pocket, bit by bit, as long as it remains value.
When value becomes growth, let it be.
Occupy your mind elsewhere, looking for more value. Don’t bother looking at what’s started to grow.
If you’ve picked well, out of your many pockets of value, some will become good growth stories over the years.
A few of these runners will turn into multibaggers.
And then, there might one odd investment, that returns a staggering amount, just like the above mentioned example.
It’s not over.
You let this one run.
Don’t finance your prodigal son’s wedding from this one. Do it by selling your losers, if you have to.
Why let it run?
What’s returned a hundred thousand percent today might well return a million percent or more over time, if we let it…
Do you get alone-time?
Can you live with noise?
Does noise cover fact?
Can you see the forest for the trees?
Why do I ask?
Do you want your ideas to turn into multibaggers?
Bask in silence.
There’s something about silence.
You don’t need to think.
Thoughts just come.
Eventually, a blockbuster idea appears.
Distracted, you might not even recognize it.
It will come, and go, worthless as it is forgotten.
Alert, you recognize it.
You put it on paper.
You see it.
It was born in silence.
The biggest money can be made when you think like no one has thought before.