At the end of every year, I ask members of The Kirk Report to offer their feedback not only about the site itself but also to share some personal perspectives. For example, in the annual membership survey I asked the following question:
“What would you say is the most important thing you’ve learned about investing and/or trading in 2010?”
Here are some of the more noteworthy responses I received:
~ On Risk Management ~
Trading management is just as important as stock selection.
Think about the risk versus reward before taking any position.
When you’re caught up in the moment take a step back and think.
Capital protection is always the top priority.
Cutting losses is the holy grail.
Don’t play chicken using mental stops. Set hard stops and manage the risk.
Avoid large losses always. Keep loses small and you can survive anything.
There will always be another great investment.
Don’t overpay or be afraid to sell.
No edge means no trade.
Sitting on your hands can often be the best trade.
Don’t participate in the market, just to participate. Make sure the conditions are favorable to your method of trading.
Only losers add to losers.
I used to be an all in and all out trader, but scaling methods have improved my performance.
The trick is to get on board and stay on board until the trade fails.
Limit the number of trades you make every day forces you to be choosy and place better stops.
When you are up the most is when you are most likely to break your rules.
When having trouble dealing with the market, reduce your position size and raise cash.
Proper position sizing is key to risk management.
There are no risk free trades or investments.
The stocks and sectors that are considered safe are usually anything but safe.
Without taking risk, there is no reward.
~ On Strategy ~
Keep it simple. Simple works.
Trade what you see not what you think.
Learn to think for yourself. Trust your gut.
A good trading system must fit both my strengths and time limitations.
Focus on things that help you make money in investing/trading; tune-out all the noise about day-to-day news & opinions.
Follow the price trends rather than the pundits.
Less is more. Learn one “bread and butter” strategy and trade the hell out of it.
Be calm, have a plan, and ride it out through the rough times.
Be flexible & sensitive to what the market is doing rather than trying to tell the market what to do.
The importance of not having and trading a biased opinion.
Execute the plan – don’t just “think” about it.
Trying to pick tops is a sucker’s game.
Price action is king, volumes, divergences, oscillators all come after.
I now consider various scenarios, not just one, and assign percentage probabilities which has made all the difference.
You must fight the feeling that you have a good idea of which way the market is headed.
Don’t overload on technical indicators. Price is the only thing that pays.
When you become an expert of one basic simple trade, results can be truly outstanding.
Let your setups come to you – do not chase. There will always be another day, another setup.
Stay in the course until evidence proves the other way around.
Don’t overtrade. It is the sitting that makes the difference.
Playing both the long and short side of the market is important than just sticking with a long strategy.
Your analysis must involve multiple time periods.
The more time spent at the keyboard, the luckier I get.
The importance of having a system and sticking to it especially when your emotions are working against you.
Inaction due to fear of the unknown is the worst thing one can do.
You only need to be correct on one or two themes per year and overweight them to have acceptable performance.
Employ a two-week watch system in place before adding any new position.
Using stock screens for idea generation is far more effective than listening to other opinions.
Buy good companies when their stocks are distressed due to perceptions of bad news.
Keep your universe of stocks to review small. Only work on a limited number of instruments until you have mastered your strategy.
Follow trends, not all investments follow a random walk.
Having a plan, even a flawed one, is key to survival.
Trading is like painting – all the hard work is in the prep if you want to do a good job.
~ On Understanding Yourself ~
Understanding yourself is as important as understanding the markets.
Stick with what you know and are good at and leave the rest.
There are many ways to trade, find what works for you.
I am not smarter than the market.
To succeed, you must be mentally strong.
Learning to letting profits run is has proven far more difficult than I realize.
The emotional part of trading can be a deal breaker.
To be honest, I am a terrible trader. But that’s because I don’t work hard enough.
Patience is a virtue in lazy portfolio investing.
~ On Development ~
To be honest, I’ve learned just how much I don’t know.
It’s up to me and no one else to make it all happen.
There is no “silver bullet” with success in the stock market – just a lot of hard work and determination.
The results don’t come without the work.
It is not a hobby to trade, it is a job.
It is much harder to trade than I imagined it to be.
Early success is no guarantee of future success.
Lose the ego.
It is tough not to get discouraged.
Watching the market too much is detrimental to my performance.
You have to find your own niche and be good at it. Practice!
You have to be on top of your game all the time to trade well.
For good or for ill, the importance of making my own decisions.
Paper trading and building confidence can be a useful tool in development.
Tips are for waiters; make your own decisions based on facts not on others opinions.
There are a lot of people who are perceived as knowledgeable about the stock market, but actually don’t really understand what they are talking about.
The professional traders who seem to succeed all had good mentors. I don’t have one and I need one.
My emotions are my worst enemy. My discipline wanes because I get burnt out and lose my interest.
Like Socrates, I’m ignorant and finding it hard to progress beyond ignorance.
Constant practice ultimately increases development more than any other thing.
~ On The Markets ~
Anything can and will happen in the markets.
The stock market does not follow conventional wisdom.
Do not underestimate the risk appetite of the stock market investor.
Traders think quite differently than investors.
In the new normal, market moves often last much longer and are much stronger than most expect.
Predictions are absolutely meaningless, don’t waste your time or energy. It’s only about whether you are making or losing money. Trade like a robot.
The market is never wrong. My opinions however, often are.
The trend is your friend, but also can be your enemy. Know the difference.
There are continual opportunities in the market.
There is way too much information and very little good information.
Don’t fight the Fed.
The government now plays a much bigger role in the market than I thought they ever could.
As J.M. Keynes said “The market can be irrational longer than you can be solvent.”
The stock market is a casino and the it is controlled by the big traders and small traders can get killed.
The importance and influence of the algos on the market.
The value of seasonality as a factor in making investment and trading decisions.
Momentum is a powerful thing. Fight it at your own peril.
There are some very powerful lessons and I hope you enjoyed reviewing them!