Feb 25, 2014

Trading Wisdom From WILLIAM EKDHARDT

Trading Wisdom From WILLIAM EKHARDT
1. What is the state of the market?
2. What is the volatility of the market?
3. What is the equity being traded?
4. What is the system or the trading orientation?
5. What is the risk aversion of the trader or client?
Regardless of how you trade or invest … you better have those answers in advance of betting real money.


  •  “If a betting game among a certain number of participants is played long enough, eventually one player will have all the money. If there is any skill involved, it will accelerate the process of concentrating all the stakes in a few hands. Something like this happens in the market. There is a persistent overall tendency for equity to flow from the many to the few. In the long run, the majority loses. The implication for the trader is that to win you have to act like the minority. If you bring normal human habits and tendencies to trading, you’ll gravitate toward the majority and inevitably lose.”
  • “One common adage on this subject that is completely wrongheaded is: you can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits. The problem in a nutshell is that human nature does not operate to maximize gain but rather to maximize the chance of gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance.” – William Eckhardt
  • “The people who survive avoid snowball scenarios in which bad trades cause them to become emotionally destabilized and make more bad trades. They are also able to feel the pain of losing. If you don’t feel the pain of a loss, then you’re in the same position as those unfortunate people who have no pain sensors. If they leave their hand on a hot stove, it will burn off. There is no way to survive in the world without pain. Similarly, in the markets, if the losses don’t hurt, your financial survival is tenuous.” “I know of a few multimillionaires who started trading with inherited wealth. In each case, they lost it all because they didn’t feel the pain when they were losing. In those formative first few years of trading, they felt they could afford to lose. You’re much better off going into the market on a shoestring, feeling that you can’t afford to lose. I’d rather bet on somebody starting out with a few thousand dollars than on somebody who came in with millions.” – William Eckhardt-
  • “In many ways, large profits are even more insidious than large losses in terms of emotional destabilization. I think it’s important not to be emotionally attached to large profits. I’ve certainly made some of my worst trades after long periods of winning. When you’re on a big winning streak, there’s a temptation to think that you’re doing something special, which will allow you to continue to propel yourself upward. You start to think that you can afford to make shoddy decisions. You can imagine what happens next. As a general rule, losses make you strong and profits make you weak.” – William Eckhardt -
  • “If you’re playing for emotional satisfaction, you’re bound to lose, because what feels good is often the wrong thing to do. Richard Dennis used to say, somewhat facetiously, “If it feels good, don’t do it.” In fact, one rule we taught the Turtles was: When all the criteria are in balance, do the thing you least want to do. You have to decide early on whether you’re playing for the fun or for the success. Whether you measure it in money or in some other way, to win at trading you have to be playing for the success.” – William Eckhardt
  • “Don’t think about what the market’s going to do; you have absolutely no control over that. Think about what you’re going to do if it gets there. In particular, you should spend no time at all thinking about those rosy scenarios in which the market goes your way, since in those situations, there’s nothing more for you to do. Focus instead on those things you want least to happen and on what your response will be.” 

Feb 19, 2014


1.    Plan your trades. Trade your plan.
2.    Keep a positive attitude, no matter how much you lose.
3.    Continually set higher trading goals.
4.    Successful traders have a well-scheduled planned time for studying the markets.
5.    Place the stop at the time you make your trade
6.    Avoid getting in or out of the market too often.
7.    Losses make the trader studious – not profits. Take advantage of every loss to improve your knowledge of market action.
8.    Always discipline yourself by following a pre-determined set of rules.
9.    Remember that a bear market will give back in one month what a bull market has taken three months to build
10. You must have a program, you must know your program, and you must follow your program.
11. Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more than likely will be profitable.
12. Split your profits right down the middle and never risk more than 50% of them again in the market.
13. The difference between winners and losers isn’t so much native ability as it is discipline exercised in avoiding mistakes.
14. In trading as in fencing there are the quick and the dead.
15. Have you taken a loss? Forget it quickly. Have you taken a profit? Forget it even quicker! Don’t let ego and greed inhibit clear thinking and hard work.
16. The deepest secret for the trader is to subordinate his will to the will of the market. The market is truth as it reflects all forces that bear upon it. As long as he recognizes this he is safe. When he ignores this, he is lost and doomed.
17. It’s much easier to put on a trade than to take it off.
18.You must believe in yourself and your judgement if you expect to make a living at this game.
19. In a narrow market there is no sense in trying to anticipate what the next big movement is going to be – up or down.
20. It is better to be more interested in the market’s reaction to new information than in the piece of news itself.
21. If you don’t know who you are, the markets are an expensive place to find out.
22. In the world of money, which is a world shaped by human behavior, nobody has the foggiest notion of what will happen in the future. Mark that word – Nobody! Thus the successful trader does not base moves on what supposedly will happen but reacts instead to what does happen.
23. When the ship starts to sink, don’t pray – jump!

24. Lose your opinion – not your money.

To win the mental game you must have…

To win the mental game you must have…
1.    …faith in yourself.
2.    …faith in your system.
3.    … an understanding of what trading size you can handle.
4.    …an understanding of the level of losses you can deal with mentally and emotionally.
5.    …a love and passion for trading.
6.    …the belief that it is possible to win in trading.
7.    …the belief that all your hard work will be worth it.
8.    …that you are a trader, that is what you do.
9.    …the ability to have your butt kicked over and over but keep coming back.
10. …the perseverance to keep trying until you are successful.