The stock market takes the brightest people and smashes them to the pavement at a regular basis. There's only one bottom line in the stock market and the bottom line is how much money you make. It is probably one of the most stressful jobs that you can find on earth. You have stress every single second; consequently, not everybody can survive. Arrogance, greed, corruption, those are all traps when you work in the stock market. Whatever your background was, it's "can you make money? can you contribute to profitable ideas?"
You should wake up in the morning with immediate dread no matter what and that is simply because if you know what you are doing, you realize that it may be a fluke.You have to be among the top 5% of portfolio managers of the country and even in a period of 24 month you have only one month down, you must make sure that this never happens again. Investing is basically making bets in a certain direction of the price of the stock (or any other investment vehicle), whether it is short or long. I basically sit down and look at what I have in the book and what I am going to need to do today; do I want to add positions or do I want to cut positions. The unwritten stock market rule is that you never tell anyone how you trade and make money. When the market opens, you have a flood of orders where the amateurs open the market and the professionals close it. You are going to have a funky period in the prices at the beginning of the session. When I trade, I focus as much as possible on the market and never let anything distract my mind and I will stay in that position until I get what I want from the market. There is a lot of thing to be worry about. It's not a time to buy or sell on pure sentiments.
Rule no 1: never listen to anyone in the stock market, same rule applies to CNBC.
Rule no 2: always buy the Dips and sell the Rips.
Rule no 3: the Holy Grail is money management; small losers, big winners.
What counts here is patience. The job looks more like an air traffic controller, it is very stressful as it may be. Prices fluctuate wildly, say by 5% in a day, and you are not in the control of the market. Informations come and go rapidly and are instantly reflected on the stock's price. The basic approach is to have the lowest risk and highest return in any given position. You don't want to allow one mistake to undo what you have just done. Consequently, I play the very best I can and act conservatively.The trick is to identify the rhythm of the market and once it has been identified, one has to stay with it. I have to decide what I am going to put in the book and then decide what is the most effective way to effectuate the relevant trade.There are times when it will be more prudent to buy it over the course of the day or over a course of several days where value comes in front of you. You need to understand what's going on in the market place. You don't just buy or sell by being long or short in stocks but you have to be able to do money in a market that heads south or north. When you initially go against the positions and then obviously are exiting them, it's a little bit frustrating but it is the rule of the game.
One of the things that trips the people all the time is that once you hit your objective you need to pull yourself out of the market and rest for a moment. I do that all the time; I'm not always in the market waiting for the opportunity to flood along and try to grab it. It is the crowd that makes the stock market move and it is your battlefield. You can be right 90% of the day but it is the 10% that really kills you. You need to be able to say "Monday will come and there is nothing that I can do between the closing of Friday and the opening of Monday". Thus, you need to rest, to shut down a bit your business part. You cannot be upbeat all the time for eventually you will end up dead. By installing the necessary software at home, I am able to follow through during the weekend the position thus be able to act properly on Monday.What did the market do, what I have in short or long, what group of stocks are strong or what group of stocks are weak; these are not the kind of things that I want to leave to the Monday morning at 0630. There's too much news going around and it never stops.
This is a business where if you don't control it, it will definitely take control of you. If you don't have a real love of what you do in here, you are not going to survive. If you don't love being a market professional who can't imagine doing anything else, you will be among the 9 out of 10 who fail. You are invincible until the moment you take a beat in the market. You can never rest on your laurels. It is very important to be humble otherwise the market will humble you in an instant (you set yourself up to blow your account out). There is an old expression: the market has a paddle to spank anyone after.
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