Sergei Riazantsev - Investor, trader, player. Greed is bad

– You should never stop working on improving your trading system. This is by definition an infinite process. Markets tend to change, and what worked perfectly yesterday may not work at all today. Observation, constant self-education, creative thinking – can not but give birth to new trading ideas. You will begin to notice more and more new market vulnerabilities. And use them to make a profit.

– Do not try to embrace the immensity – to profit from every price movement in any direction. It’s impossible. Our task is to get a decent profit on obvious trends. It is enough to be on the right side of the market even for 50% of the “life” of the trend. For example, if a short-term bullish trend lasted for a week, and you held long positions for two or three days – great. This is more than enough.

Once upon a time, a young Russian scientist Peter Kapitsa (future Nobel Prize winner in physics) I was at an international technical exhibition. It was in the first half of the XX century. Then the United States presented a technical novelty – a complex electromechanical device. Suddenly, right during a demonstration in front of the public, this pride of American engineering broke down. It was not possible to perform repairs on their own.

And then someone suggested: “Among us is the great Russian scientist Kapitsa. He will surely be able to fix it, he is a genius!".Th e price for repairs was promised at that time huge – a thousand dollars. A lot of money.

The physicist accepted the offer and asked to bring him a hammer. He carefully walked around the unit from all sides: looked, listened, thought. Then he swung and hit a certain point. The device immediately started working. The manager of an American company paid the promised amount (for comparison with today’s prices, you need to multiply by about thirty – we get $ 30,000).

For a report to the accounting department, he asked to give him a receipt for receiving money. And an estimate for repairs with a list of completed works. Secretly hoping that Kapitsa would be ashamed to take the entire amount for such a small effort. Just one hit.

However, the scientist was not confused by this request and he wrote on a piece of paper:

Receipt

I have received US $ 1,000 according to the estimate for the repair:

Hammer blow – $ 1

Determination of the place of impact – $ 999

This seemingly simple blow concealed a huge amount of experience and knowledge.

Intuitive trading is the last stage at the end of a long and correct way. And it will not be achieved in a short time. You will not be able to jump over the steps (skill levels). First you need to understand that you know almost nothing and do not know how. Then you will learn a lot, gain experience, including unsuccessful experience. And only then, perhaps, an intuitive understanding of the market situation will appear.

Intuition is an unconscious skill. Jesse Livermore wrote about intuition in trading, being already a millionaire, after decades of stock trading. Jesse Livermore wrote about intuition in trading, being already a millionaire, after decades of trading on the stock exchange. George Soros wrote about the same thing, after successfully managing his multibillion dollars investment fund for many years. If you do not have at least five break-even years in the world of professional trading behind you, do not rush to become on a par with the people mentioned above. It’s too early for you.

A novice boxer who knocked on a pear for a couple of months and imagined himself ready for a fight with Mike Tyson is not just ridiculous. Dangerous to himself. He will lose with a probability of about 100%, and it’s still good if he stays alive and well. To begin with, the right step is to train like Tyson.

Mike recalled in his autobiography “Undisputed Truth” that after training, he did not have the strength to walk, and… he was crawling to his room. He lived at that time in the house of his coach Constantino “Cus” D’Amato. He had to crawl from the first floor, where the gym was located, to the third floor. And only then, after long and hard training, Mike defeated opponents in the ring in a matter of seconds. Most often – a direct blow to the chin. The simplest intuitive movement.

And yet, every trader (beginners even more often) has encountered one or another manifestation of intuition. Many people are familiar with the feeling when, without any clear reasons, it seems that the trend is about to unfold. Or vice versa – it will continue. The irrational principle is generally very strong in a person.

So, in order not to lose profit, you need to fix it right now. Then it will be too late! But after the order is closed, the price moves in the right direction by 3,000 ticks. Or the same trick with losses: it seems that the trend is about to turn around, and the losses will definitely turn into profit. We need to be patient a little more, and more, and more… This may result in “margin call” (lack of funds on the trading account) or “stop out” (forced closing of positions).

Fight with such “intuitive insights” as with the worst enemy. Otherwise, these fantasies will ruin you. And it will no longer seem to you that there is nothing on the deposit. The trading account will indeed be empty.

Recommendations:

– Over the years of practical work in the market, I can say that it is before a powerful price movement that the temptation to close a position will be especially strong. And before a catastrophic increase in losses, it will seem to you that you should not accept losses. As if you need to wait another five minutes (an hour, a day, a week) and the trend will surely unfold. Use these unprofitable illusions to your advantage. When “hands itch” to close an order with a small profit – by an effort of will, breaking yourself, turn off the trading terminal. And just take a walk for a couple of hours. With a high probability, the profit will significantly increase. Try this. You’ll like it.

– Of course, not every one of us is Peter Kapitsa or Mike Tyson. Think about it, for example, how many doctors are there in your city? Many. And how many doctors are there from God who are able to put an almost hopeless patient on his feet? Few. How many school teachers are there in your city? Many. And how many outstanding teachers who are able to interest students so that they do not want to leave the lesson? Few. And this is normal. True talent has always been a rare phenomenon.

– It’s the same in trading: you’re not Livermore, Buffett or Soros. Do not try to appear to be someone who you are not. To reach the level of a professional (steadily earning, and not losing in the market) is quite an achievable task. For anyone who has the determination. Determination to learn every day. The determination to fall and rise, to make mistakes and correct them. And the most important thing is the determination to change.

Trading starts with a demo account.

Although there is a dismissive attitude towards trading on demo accounts among many traders. This is considered a frivolous occupation, a waste of time, pampering. Let’s allow ourselves to disagree with this.

You can’t do without this first step, at least in order to understand the trading terminal, learn how to open and close orders. A huge advantage of a demo account is the complete absence of risk. Whatever happens there, up to the loss of all demo money, it will not affect your real wallet in any way. If you have a virtual million dollars in your account, after a couple of months you have leaked it, then you won’t even shed a tear. Again, this is a huge advantage that should be used.