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I’m taking this list from a book called Stock Market Wizards by Jack D. Schwager. Of course I’m using it under the fair use law and I will put my commentaries in the list provided. Some modifications are made throughout the list to be enjoyable to read. The article will be divided into 6 parts. So here’s the “wizard lessons” that is usually done by experienced traders and investors alike:

• There is no single true path. As I’ve wrote several weeks ago here, there’s no right investing style. Although I don’t like to diversify my portfolio very much, that doesn’t mean that a heavily diversified investors is a bad investors. As long as you can master your trading and investing styles, and disciplined to your trading strategy, I think all style can succeed on investing.
• Have a trading strategy and stick to it. Most of failed investors/traders are usually smart people that can design a very effective trading strategy but loose it because they can’t stick to their plans. It happened to me once where I already set a cut-loss price at -5% of the buying price. Emotion crepts in and I kept holding that position until it’s well under 15% of their original price. A very expensive way to learn but It stick to my mind. Stick with your trading plan!
• You have to trade your personality. The worst thing in life is using someone else’s shoes. It’s also true in trading and investing. If you have a tempation to be an agressive trader and yet you are using a conservative trading plan, you are bound to fail. My friend once tried to buy a stock based solely on market indicators, neglecting her expertise on fundamentally analysing the company. The result? Of course a big loss for her. Thank God the loss didn’t wipe her out of the market.
• Failure and Preserverance. Just as in real life, the life on the trading floor is of course full of pressure and stress and eventually failure. It’s not how long did the ball fall to the ground, but it’s how high it can bounce. The key on successful trading is persistence on what you do. Of course, I’m not a successful trader my self but many times I wanted to call a quit on trading because I’m on a losing streak. Fortunately, this phase of depression didn’t shadow me for too long before I’m back on track in the stock market. The profit isn’t that big but I’m improving my trading record to a, although small but, constant profit. The key is persistent, never give up.
• Great traders are marked by their flexibility. No, I’m not a great trader, this is the sentence used on Schwager’s book so I may as well just follow the style :P. The flexibility of a trader will be fully reflected if he use that flexibility in options market. As far as I know (I’m not fully invested on that investing instrument), you can cover your losing position with ease and gain passive income from the contract you sell. This mean you can profit from both selling the contract or buying the contract well below the market price, hence the flexibility. I’ll write some more about options in the near future.
• It requires time to become a successful trader. Just as in real-life (it seems that all the points corresponds really well with real life isn’t it?), it takes time to be a success on something. That is also true on trading. The only way to learn your way in trading is not only by reading books or attending trading workshop, but also to accumulate real trading experience with real trading. Of course this will take a while.
• Keep a record of your market observations. Learning to trade is no different than learning a class in a university. You have to take some notes in order to really stick something to your head. Infact, the knowledge won’t last long if you don’t write it somewhere. So keep a record of your market observations. What patterns occured when a stock is bullish and what signal flared before the great plunge of the bear. This notes will help you in the future trading experience. Too bad I’m still a lazy boy when it comes to keeping notes. It’s scattered all over and it got really messy.

There’s still more points from the stock market wizards’ book that has yet to be written and commented. Keep in touch and subscribe to our feed to know when will the next list hit the blog. Or better yet, just buy the book ;-)