What I Learned Losing A Million Dollars
Emotions are neither good nor bad; they simply are. They cannot be avoided. But emotionalism (i.e., decision making based on emotions) is bad, can be controlled, and should be avoided. So instead of examining each of the many individual emotions, this chapter will focus on the entity that epitomizes emotionalism: the crowd.
Brendan Moynihan • What I Learned Losing A Million Dollars
The good news is, if you’re long and the market is going up and you don’t have a clue as to why, you get to keep all the money. Every cent. They don’t charge you a single penny if you were “only lucky.” The bad news is, if the market is going up and you’re short and you know exactly why it’s up, you don’t get any money back.
Brendan Moynihan • What I Learned Losing A Million Dollars
running a business keeps you continuously exposed to the risks coincident with the commitment of resources to future expectations.
Brendan Moynihan • What I Learned Losing A Million Dollars
One of the oldest rules of trading is: If a market is hit with very bullish news and instead of going up, the market goes down, get out if you’re long. An unexpected and opposite reaction means there is something seriously wrong with the position.
Brendan Moynihan • What I Learned Losing A Million Dollars
You know what you should do? Don’t go looking for supporting evidence or reasons to stay in the market. Do what feels good. Get out. There is an inverse relationship between your threshold of pain and success in the markets, so as soon as you feel the pain: get out. What if you have on a long position and prices are going up, does that feel good? D
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Without a plan, you fall into one of two categories: a bettor, if your main concern in being right, or a gambler, if your main concern is entertainment.
Brendan Moynihan • What I Learned Losing A Million Dollars
When it comes to the markets you’re supposed to do what feels good.
Brendan Moynihan • What I Learned Losing A Million Dollars
However, internalizing an external loss is a lot easier to do with the other type of loss-producing activity: a continuous process—an activity that has no clearly defined end. Losses from continuous processes are much more prone to become internalized because, like all internal losses, there is no predetermined ending point.
Brendan Moynihan • What I Learned Losing A Million Dollars
A plan takes the positive attributes of games (not gambling games per se but the concept of a game) and applies them to the market, giving you the structure necessary to create a discrete event.