21 Rules of SUPER SUCCESSFUL TRDERS / INVESTORS To Make TONS of Money In Share Market

June 16, 17

21 Rules of SUPER SUCCESSFUL TRDERS / INVESTORS To Make TONS of Money In Share Market

Greetings from Hitesh! Hitesh Parikh is taking a back seat now. Today I am presenting a collection of thoughts by great traders / investors and writers. They are just 21. But each is worth a BOOK on them. Take out time in the weekend. READ, RE-READ and THINK on each of them. To make it easy to think – I have given my COMMENTS on each of the thoughts in RED with brief background of the person who said that. Hope it will make it more meaningful for you.

1.  “Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do.” ~ Mark Twain.

Most NORMAL guys think – we will do it someday. That someday will never come automatically – unless you decide to bring it consciously. “Unless you consciously DO something – UNCONSCIOUSLY you are deciding not to do it”. READ this sentence twice so that it sinks in your system. Many friends are thinking to join us from 2008. There someday has not come yet and SENSEX has gone up from 8000 to 31000.

2. “The market can stay irrational longer than you can stay solvent.” ~ John Maynard Keynes.

I find logic oriented guys in the market – they tell you this is the EPS and this is the EPS growth and this is the PE – so price should be so and so next year. Does this mean that MARKET will AGREE with that LOGIC? Being a GREAT ECONOMIST – KEYNES had lost tons of money in market. So, this saying was from him. He was the most logical guy we have ever known.

3. “I never buy at the bottom and I always sell too soon.” ~ Baron Rothschild.

Rothschild was the only JEWISH in CHRISTIAN dominated HOUSE of LORDS. This is a saying of OPPORTUNISTIC person. He suggests to exploit the opportunities rather than being idealistic in the market.

4. “When the facts change, I change my mind. What do you do, sir?” ~ John Maynard Keynes.

Once again very logical and most important advise. When market price goes up – most of the NORMAL guys do not bother to look at the FACTS (read FUNDAMENTALS). They just hold on / enjoy. When the price goes down – they PANIC and they look out for the FUNDAMENTALS. Most SEASONED investors – look at the fundamentals when the price is going up or going down. They change their strategy only and only when FUNDAMENTALS change.

5. “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.” ~ Warren Buffett.

This requires you understand YOURSELF / MARKET and YOUR INVESTED COMPANY in much details. Unless you know the 3 factors mentioned about – you will not be follow what BUFFETT says. That’s why we tell our clients to be with us for 3 years.

6. “It is not our duty as speculators to be on the bull side or the bear side but upon the winning side.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator.

Jesse was the BIGGEST INDIVIDUAL SPECULATOR the world has ever seen. He says – focus on winning and no on selling or buying. For winning – do whatever needs to be done. 90% of the guys follow BUY – HOLD and SELL model. This is not suitable in all market conditions.

7. “The principles of successful speculation are based on the supposition that people will continue in the future to make the mistakes that they made in the past.” ~ Thomas F. Woodlock.

He was a famous author and he had seen the fall of 1929. His saying is important because – it deals with the COLLECTIVE MIND. He says – they keep on doing the same mistake time and again. You just have to take advantage of the same. However, this also requires SELF KNOWLEDGE more than anything else. Unless you know yourself first – you can’t know the market.

8. “It never was my thinking that made the big money for me. It was always my sitting tight. Got that?” ~ Mr. Partridge in Edwin Lefevre’s Reminiscences of a Stock Operator.

This is 100% opposite advise from Mr.ROTHSCHILD.  This guys talks about investing in NORMAL circumstances. Under normal time – it pays to buy – hold and sell. Now, to understand definition of NORMAL time – you need the deep knowledge of SELF / MARKET and MARKET PARTICIPANTS.

9. “They say you never grow poor taking profits. No, you don’t. But neither do you grow rich taking a four-point profit in a bull market.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator.

Just think what would have happened to Mr.Rakesh Jhunjhunwala had he sold Titan purchased at Rs.40 at Rs.80? He held them from Rs.40 to Rs.10000 (current price is 500 after split and bonus)!!! He is still holding. It needs lot of conviction and patience.

10.              “Remember that prices are never too high for you to begin buying or too low to begin selling. But after the initial transaction, don’t make a second unless the first shows you a profit.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator.

Most LOGICAL and sound advise – I always follow. I see many investors are in a hurry to invest / trade without understanding the MARKET / SELF and MARKET PARTICIPANTS. They go on doing average without the first transaction showing profit.

11.              “A loss never bothers me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does the damage to the pocketbook and the soul.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator.

If you have an open position and it is in LOSS – you will not be able to SLEEP peacefully as your loss can go up substantially next day. It pays to keep stop loss.

12.                “If a man didn’t make mistakes, he’d own the world in a month. But if he didn’t profit by his mistakes, he wouldn’t own a blessed thing.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator.

He says – to err is human. But to profit from your ERROR is the quality of BRAVE HEART. It requires that you SWALLOW your Ego and Co-operate with market.

13.              “The man who is right always has two forces working in his favor – basic conditions and the men who are wrong. In a bull market bear factors are ignored.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator.

Another master advice – when market is in BULL conditions – just don’t think about SELLING your stocks (applicable to only INVESTORS and not very short term traders). Go on adding at each correction and you will make tons of money. We have not sold single shares since 2009!! We have only added depending on our CASH FLOW.

14.              [What advice would you give the novice trader?] – “First, I would say that risk management is the most important thing to be well understood. Undertrade, undertrade, undertrade is my second piece of advice. Whatever you think your position ought to be, cut it at least in half.” ~ Bruce Kovner in Jack Schwager’s Market Wizards.

BRUCE was a HEDGE FUND MANAGER and he gives the superb advice. During TEJI – I see people get motivated and they buy HUGE quantity without there holding (MENTAL HOLDING) capacity. When the prices go down – they start panicking and sell it at loss. So, he says – buy half what you ought to buy. This is more suitable to TRADER and not to INVESTOR like BUFFETT.

15.              “There is probably no class of trades with a higher failure rate than impulsive trades.” Jack Schwager in Market Wizards.

Jack is most known person in FUTURES and HEDGE fund industry. He says IMPULSIVE guys are the biggest loser. My 25 years of working with market also proves the point.

16.              [What is the most important advice you could give the novice trader?] – “Trade small because that’s when you are as bad as you are ever going to be. Learn from your mistakes.” ~ Richard Dennis in Jack Schwager’s Market Wizards.

This is the most important advice we tell our NEW CLIENTS. We tell them to TRADE as small as POSSIBLE to know them and know the market. Most IMPULSIVE investors go for a toss in their first transactions only when they buy huge quantity without knowing their capacity.

17.               “The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses. If you can follow these three rules, you may have a chance.” ~ Ed Seykota in Jack Schwager’s Market Wizards.

If you cut your losses – you will have the capital to trade next day. Ed Seykota is also a big name in the investment industry.

18.              “Charting is a little like surfing. You don’t have to know a lot about the phsyics of tides, resonance, and fluid dynamics in order to catch a good wave. You just have to be able to sense when it’s happening and then have the drive to act at the right time.” ~ Ed Seykota in Jack Schwager’s Market Wizards.

Catch the TREND. We had told way back in 2009 that market will be in TEJI and we see 35000-45000 index in coming times. Just see after our calls – most experts are taking the same thing – NOW. In the ART OF WAR – it is said KNOW THE TERRAIN. So, know the market and act accordingly.

19.              “I have two basic rules about winning in trading as well as in life: (1) If you don’t bet, you can’t win. (2) If you lose all your chips, you can’t bet.” ~ Larry Hite in Jack Schwager’s Market Wizards.

This is taking you to the FIRST RULE. If you want something – you need to consciously prepare yourself for the same. If you can’t – you will never get what you want. He adds to the same  - that save your capital for the next day so that you can trade NEXT day also. LARRY is also a HEDGE FUND GUY.

20.              “Perhaps the most important rule is to hold on to your winners and cut your losers. Both are equally important. If you don’t stay with your winners, you are not going to be able to pay for the losers.” ~ Michael Marcus in Jack Schwager’s Market Wizards.

Most portfolios have companies losing 80-95% of capital. They reduce the profit of profitable companies in your portfolio. So, keep the winning guys and shun the losing guys. This should be done simultaneously.

21.              “Lose your opinion – not your money” ~ Unknown.

Market is always right!! Keep your EGO aside when you come to the market. Market has its own ego. Market does not know your and does not care for you. Your opinion is your own creation.

The UNIQUE thing about above RULES:-

All the above RULES have come from a personal experience of 25 -50 years from the respective person. They have shared their life experience with the above quote. It may look easy to follow or easy to pass on. But they are not at all easy to follow. They are SIMPLE but not EASY.

I have invested 5 hours in compiling for my readers. Hope you take advantage of my efforts.

If you need PERSONALISED GUIDANCE – please approach me.

Have a HAPPY LEARNING.

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Live With Passion…Invest With Passion.

Hitesh Parikh.