STUDY YOUR WAY TO STOCK-MARKET SUCCESS

[Conrad Alvin Lim]

STUDY YOUR WAY TO STOCK-MARKET SUCCESS
Richard Smitten
Author & Stocktrader

It was Jesse Livermore's observation that the public sincerely believes that the stock market is an easy way to make money.

If they have some extra money to invest, they believe the stock market should offer them an easy way to increase the value of that money.

This is not the case and never has been. Livermore observed that people who have no knowledge of the stock market but insist on playing it, generally lose their money in a hurry.

In Livermore's view, if you want to succeed in the stock market, make sure you get plenty of sleep, give yourself plenty of time for the uninterrupted study of all the elements involved with the market, and remember that the key to success is knowledge and patience.

So few people succeed in the market because they have no patience and are generally ignorant of the market. Finally, they want to get rich quickly.

Anyone who figures that his success is dependent upon chance may as well stay out of the market.

His attitude is wrong from the very start. The great trouble with the average people who buy securities is that they think the market is a gambling proposition.

One should realise at the outset that to work in the stock market required the same study and preparation as law or medicine.

Certain rules of the market are to be studies as closely as if you were a law student preparing for the Bar.

Many people attribute Livermore's success to luck.

As Livermore said, "That is not true; the fact is that since I was 15, I have studies this subject closely. I have given my life to it, concentrating upon it and putting into it my very best."


From Trade Like Jesse Livermore by Richard Smitten
Jesse Livermore was a trader who made $100 million just before the Great Depression in the 1930s.

[Conrad Alvin Lim]

In life, we take pains to learn anything and everything.

From basic schooling to tertiary education, it take us years to pick up, learn and master a subject. This education foundation will stand the student in good stead for the many years of their adult life as the fundamentals of their early education is never lost.

National Servicemen are enlisted as 18 year old boys who get broken down, trained and drilled to be soldiers in 3 months only to endure more training and regimentation for the next few years of their lives This sort of education ensures that we have a competent defense force that is ready and willing to pick up arms and do their duty at a moments notice.

A professional soccer player starts at a very young age with proper coaching, regular training and lots of practice. He will get hurt, injured and even insulted from time to time. He also has to endure psychological tests which builds his character, will, patience and determination. And after all that, he has to battle his way into the first team with consistent performances, discipline and fitness. Upon making the team, his work load gets heavier as expectations run high. To better himself, he studies tactics, opponents’ strengths and weaknesses, teamsmanship and leadership. It is a never ending road to perfection.

Doctors, lawyers, teachers, engineers ... take any profession and you will find this pattern of dedication and perseverance to be the best. And to be the best, the learning curve is a long one ... the price you pay is time, the cost is persistent and the rewards are never immediate.

There is no quick path to long lasting success. There is no formula to hasten the process. There is no escape from hard work.

But ...

The reward for such perseverance, dedication, determination, patience, endurance and persistence, is the stability and consistency of wealth, and the discipline to manage that success.

Nothing permanent can be accomplished in haste and hasty accomplishments are always temporary.

[Conrad Alvin Lim]

Most of the investment gurus currently in the market now, made their money and fame in markets like the tech boom and post recession spike. Their methods of trading are based on those types of markets.

The Tech boom of ‘95 saw the DOW gain 6’000 points in 4 years.

The Post Recession bull run saw the DOW make a 2’700 points run in a single year.

Its easy to design strategies based on simple momentum techniques to make lots of money in such markets. But will the market always look like this?
Today’s market is nothing like the ones the gurus had then.

I began trading in a market that was hit by Katrina and Rita, had no Santa Clause rally to shout about, a year that started with an Inverted Yield Curve and a major 800 point tank on the DOW in May of 2006. From the low of Oct 05 to the high of May 06, the DOW only squeezed out 1’400 points for me and took back that 800 in May. But that was the market I traded in and survived as a newbie trader.

What worked for those gurus, may not work for you because you don’t have the same market conditions, nor the same account size, mentality and psychology.

Learning from Michael Schumacher will not make you a great driver like him.

Training under Beckham will not guarantee that you’ll bend it like him.

Learning from Michael Jordan will not promise you the Air up there.

And if you do become like MJ, Beckham and Schumi, the conditions that you’ll be competing under, will be different from that of their time. So how will you fare then?

You owe yourself the kind of traning and discipline that moulded the likes of MJ, Becks and Schumi. They took what they learnt and made it their own. Their successes have been on the back of hard work, constant practice, iron discipline with pure grit and determination.

And proper coaching. Therefore if you want to be like Mike, find his coach.

What you owe yourself is a proper education in the art of trading that will stand the test of time and market forces.

You need to learn the basics and move forward from there.

You have to identify the kind of trader you are and what suits you.

You have to forge the foundation on which your trading experiences will come from.

You need a group to keep in touch with, to grow and advance beyond the basics.

You need confidence, motivation and stamina to stay the course.

You need to get real and stop kidding yourself that you can be like your guru after only 4 days.