Top 5 Lessons from Stock Market Wizards

Happy New Year!

First of all, I hope all of you reading this have had a great holiday season and have had an excellent time with Family and Friends.

With a new year, we can refocus and double down on what matters most to us.

If you are happy with your performance in 2022 then build on that momentum! If not, take it as a learning opportunity and make the most of this next year starting with a clean slate.

Before we dive in make sure you are subscribed!

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I wanted to share an interview I recently did with Vivek Bajaj from Elearnmarkets. In this interview I discussed many different topics including my background, trading style, and the Top 5 Lessons I’ve learned from my interviews with market wizards.

I highly recommend watching the interview which is linked below. I discuss the top lessons starting here around 10 minutes in

Top 5 Lessons from Stock Market Wizards

1. Stick With it and Put in the Work! Study History

First, you have to be passionate about trading and motivated to learn and improve. Trading has many ups and downs and it takes time to find your style and build a process.

However, the market wizards I’ve talked to all went through this. The common thing they share is that they never gave up! Even after blowing up for suffering drawdowns they recommitted and worked hard to improve.

I highly recommend studying history both in terms of markets, stocks, and top traders so you can learn from the past and from others’ mistakes. John Boik’s books are excellent for this.

See my list of recommended books here

2. Focus on the best setups and best stocks!

The best traders I’ve talked to don’t settle for second-best opportunities. They wait until conditions and stocks setup in a way that they have studied and can execute on.

What these ideal setups or stocks look like depends on the particular style.

3. Establish Trading Rules for your process

Each Market Wizard I’ve interviewed has developed rules that guide their process and decision-making.

These rules are what they fall back on when the going gets tough and they are designed to protect the trader and their capital.

In order to be successful over time you need to have a defined process that is consistent. A lack of rules leads to randomness and an eventual lack of risk management or logical decision-making.

4. Manage Risk Tightly and Use Stop Losses

This is a must and a common characteristic of every top trader I’ve talked to. They all are extremely focused on managing risk and judging risk/reward.

The vast majority of them use stop losses or similar methods to cut their losses tightly when a setup fails or a stock should be sold.

Capping your losses at a fraction of your gains ensures you build in the expectation of some failures into your system and ensures resilience.

5. Conduct Post Analysis, Analyze your weaknesses

This is crucial. The best traders became that way by failing, studying their mistakes, and working to improve.

It’s common to want to hide from bad trades or push them aside, but these are precisely the trades we can learn the most from. With a new year, if you are not happy with your results, go through your trades and look for common strengths and weaknesses.

Armed with this knowledge, you can move forward and improve in 2023.

If you would like more information on how to review your trading check out this video

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I hope you found this article helpful! If you did please leave a like, comment below, and share it on twitter using this button.

I wish you all an amazing 2023!

Warm regards,

Richard