Thursday, January 2, 2014

Trading Success: Secrets of William O'Neil

I take this opportunity to wish all our readers and well-wishers a very happy and a profit-making new year! 

However, i feel that New Year doesn't make us happy on its own. We have to make efforts to see that it makes us happy! On such occasions, once in a while, i like to refer to what the legends of the financial markets believe in, what is it that made them who they are today! 

Legendary trader of the yesteryear William O'Neil bought a seat on the NYSE at age 30 (the youngest at that time ever to do so), and in 1963 founded William O’Neil + Co. Inc. That is just Wow!

He believed that success requires:
1. Effective trade selection process
2. Risk Control
3. Discipline to adhere to the first two! (My Personal Favourite)

He says that if the stocks that have been leading the bull market start breaking down, that is a major sign the market has topped. Daily advance/decline line is sometimes a useful indicator to watch for signs of a market top.

Here are some of my favourite pointers from his best-selling book 'How to make Money in Stocks':
  • A good way to ensure miserable results is to buy on the way down.
  • Even worse habit is to average down in your buying, rather than up.
  • Most rumors are false.
  • Many of the best investments will be names you wont know very well but could and should know if you would do a little studying & research.
  • Personal opinions & feelings are far less accurate than markets
  • Majority of unskilled investors stubbornly hold onto their losses when the losses are small and reasonable, until they get much bigger
  • Investors sell a stock with a profit before they sell one with a loss. This is wrong!
  • Always trade on the market price, not limit price.
Food for thought, isn't it?

P.S. Thank you all for your time and love in 2013. I look forward to your company in 2014 as well, while i continue to try to create interesting value for all of us. 

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