William Eckhardt On Trading

I first was exposed to William Eckhardt when I read The New Market Wizards by Jack D. Schwager. This past Thursday, Charles Kirk posted a series of quotes on trading and investing attributed to Mr. Eckhardt. In these quotes, Eckhardt touches on many subjects that should hit close to home for many traders.

My favorite in the series is:

“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

To read all nine quotes that Charles has featured, click here for the full post.

Blogs I Like To Read

A visitor to this blog recently asked me what finance blogs I enjoy reading and I thought I’d share that answer with everybody.

The type of blogs that I find interesting are the ones where the writer shares his daily profit and loss. I’m curious as to what others are doing and more importantly it shows me that everybody goes through their up and downs. With that in mind I read Dinosaur Trader who each day lists the P&L of a bunch of traders in his “Virtual Office.”

Glenn is a trader from British Columbia (my home province) and he writes a blog called DehTrader. I also enjoy reading Trader Bubs’ daily recaps. Others that I read who also share their P&L include Boogster and 10K Thrown Away.

However, Charles over at The Kirk Report runs my favorite market blog. He packs lots of great information into every post and his paid Members Area is well worth the $50 a year donation fee.

Back in the day, I used to read NYSE Trader on a daily basis but he stopped blogging which is a shame because his daily recap posts were quite good.

Adam Warner’s, Tim Knight’s, and Frugal Trader’s blogs also make my daily reading list.

Game Plan For The Week Ahead

After reviewing the past two weeks and trying to figure out why I haven’t felt comfortable on a few of those days, I came up with a game plan for the week ahead.

I am going to make a conscious effort to be patient and look for the best entries. I know I should be doing that every single day but sometimes I stray away, get lazy and impulsive. This has certainly been the case a few times lately.

If I keep this on my mind all week, I should reverse the course I’ve been on and get comfortable again. Enjoy the rest of your weekend and let’s hope that Monday is a high profit day for everyone.

Trading Mistakes

Boogster has written a great post that should ring true for a great number of traders. One of the hardest obstacles to overcome in trading is actually doing what you know is right.

I don’t know if it is a certain personality trait or some sub-conscious way of thinking that causes traders to go off the deep end and throw out all their rules. Really it should be quite basic. Learn a system, execute the system. BUT a funny thing happens when you actually have money on the line. Maybe it’s being lazy and trying to find a shortcut.

I don’t know if this rings true for every trader but it certainly does for me. I’ve been trading for almost three years and I still struggle with keeping my emotions in check. After I learned the basics and took my beginner’s bumps, I’ve had three blowups where I lost 5 figures in a course of a week or less. This was after I thought I knew what I was doing.

The funny thing is that two of the blowups were after very nice runs where I thought I could do no wrong and thought that I finally mastered this thing. Since I gained more capital, I was trading bigger position sizes which messes with your mind. Being down $500 holding 200 shares is one thing. Being down $5000 holding much more is totally different.

In order to fix this problem I now take out all my profits every Friday. This serves the purpose of keeping my initial capital and forces me to not increase my exposure. Keeping things the same and within reason makes a trader comfortable and lends a hand to keeping emotions in check.

Roger Clemens TV Coverage

For those that have the TV on while trading, you no doubt caught a few hours of the Clemens testimony in front of congress. I still can’t find a connection between steroids in baseball and its effect on the stock market but I’ve got three scientists working on it. Nevertheless, CNBC must have found that connection as the brains behind the network decided it would make for great TV on a business channel.

Frankly, I think it’s beyond ridiculous that the government is actually spending time on this. Is it really mission critical to find out if a baseball player injected a substance into his rear end? Tax dollars at work.

I’m a sports fan. Probably a bigger sports fan than the average joe and frankly I don’t care if a player juices up. Sports is about entertainment. Nothing an athlete does can ever be considered to be life or death. I can honestly compare a baseball player using steroids to a actress getting plastic surgery. Maybe that will be the source of the next hearing: “Nose Jobs and their effect on HDTV telecasts”.  Sure it’s unfair, but so is being born shorter or uglier. That’s life.

And don’t get me started on the whole “we must protect the children” argument. Just like drugs, both illicit or government taxed tobacco and alcohol, they’re a reality in life. At some point every child growing up will be exposed to that side of life in one form or another. The best one can do is show them the reality of using the drug. Showing a video of Lyle Alzado will leave a much greater impression on a kid than some congressman grilling Roger Clemens. So maybe it would have been wiser to allocate the ”Mitchell Report” funds to something that could actually make a difference.

Don’t Eat Poppy Seed Bagels Before Heading Off To Dubai

I’ve always found Dubai to be quite fascinating and a place that I would eventually like to visit. However, after stumbling on this article it really made me re-evaluate my thoughts on the matter. I’m all for obeying the local laws of any place you visit but when common sense is trumped by words written on paper, it makes me shake my head. Maybe there is more to these stories than what is written/known, maybe not. Either way I don’t care to find out firsthand.