Ed Seykota is a very well known one-of-a-kind trader from the west, who has found meaning in his life, and has been living it exactly as he wanted to. Given the fact that markets have an immense impact on our lives as traders, his search for meaning in life and living by it is nothing less than inspiration to us!
There were certain important areas for him:
A) Long term trend
B) Current chart patterns
C) Picking a good spot to enter
For these, he followed some simple rules:
1. Cut losses
2. Ride winners
3. Keep bets small
4. Follow rules
5. Know when to break the rules!
He always focused on following these rules with discipline. Rule no 4 & 5 have been very dear to him.
He also considered Gut feeling to be very important, because on many instances, you don't have reasons for your feeling, but you just know it will happen. But you need to know when to listen to it!
Psychology motivates the quality of analysis, and puts it to use. Psychology is the driver and analysis is the road map.
A winning trader personality is:
1. He loves to trade, &
2. He loves to win.
Everybody gets what they want out of the markets. Some people seem to like to lose, so they win by losing money! Food for thought, isn't it?