Seykota's Essentials Card - Revisited

Discussions about personal psychology for the individual trader.
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alp
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Seykota's Essentials Card - Revisited

Post by alp » Fri Jan 18, 2013 7:18 am

I have the essentials card with me for about five years now: http://www.seykota.com/tribe/essentials/card.htm

I have found that the essentials are really valid and even more "essential" now, more than ever. The "essentials" rules of thumb are:
The Essentials

Ride Your Winners
Cut Your Losses
Manage Your Risk
Use Stops
Stick to the System
File the News
I don't know if any of the elements have any order of importance. By my own personal experience, I feel that all of them have equally weighted importance.

Nevertheless if I were to change the order of them today, I would put them in this order:
The Essentials

File the News
Manage Your Risk
Use Stops
Cut Your Losses
Ride Your Winners
Particularly, with regard to File the News I think it encompasses almost everything that is written about trading in the industry, including the opinions and analysis of the so called "experts" or "professionals", articles on specialized magazines, websites, etc. I have found over the long run that actually there are no "professionals" in trading. Being "too intelligent" and believing one has the "knowledge" or "edge" in trading is highly detrimental and risky.

So I would particularly revisit "File the News" to include all professional money managers and analysts, especially the so called fundamental analysts and technical likewise. Yes, this includes Winton, Eckhardt or any other "expert" one believes and relies on for some "precious" information.

This also include my former belief that fundamentals tend to dominate market forces on the long run. This is also a very detrimental belief or assumption. And actually very useless.

alp
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Post by alp » Fri Jan 18, 2013 7:30 am

Also, if one feels tempted to break the essential rules, that as a last safeguard I think it's very prudent to use the "remorse ratio": viewtopic.php?t=6457
sluggo wrote:The "when in doubt, do half" suggestion is explicitly a pre treatment for soon-to-be-wounded feelings. A salve for human emotions. Richard Dennis supposedly said although it is bad to occasionally deviate from the mechanical rules, it is 100X worse to become "emotionally destabilized". When destabilized, traders often abandon the mechanical rules entirely, with disastrous results. (In poker, the expression "Going On-Tilt" describes the same mental state and its always-disastrous results.) The "Do half" suggestion temporarily gives you permission to cheat on the rules a little bit, in situations that are incredibly painful and potentially destabilizing, to preserve your sanity. You cheat just enough that you remain stable, so you can go back to following the rules.

rhc
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Post by rhc » Sat Jan 19, 2013 1:09 am

Here is a couple of good reads re: the "essentials"
viewtopic.php?t=5397&highlight=essential
and
viewtopic.php?t=8159&highlight=essential

I wonder what 'Slick Willy' would have said re: these Essentials? :lol:

Chuck B
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Post by Chuck B » Sat Jan 19, 2013 8:12 am

rhc wrote: I wonder what 'Slick Willy' would have said re: these Essentials? :lol:
Remember? He had his own Essentials:

1) Vigorously deny the allegation.
2) Launch a brutal counter-attack against your opponent (i.e. vast right-wing conspiracy).
3) Then change the subject (i.e. this is where you rise to a "higher moral ground" by now talking about a sensitive subject no one can challenge).

All that said, he was/is a much more grounded in the backbone of America than many in Washington today. It would be nice if our only problem today was Clinton cheating on Hillary.

alp
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Post by alp » Sat Jan 19, 2013 1:44 pm

rhc wrote:Here is a couple of good reads re: the "essentials"
viewtopic.php?t=5397&highlight=essential
and
viewtopic.php?t=8159&highlight=essential
:?: What's "good" about these reads? Your intention doesn't seem clear to me. :)

rhc
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Post by rhc » Sat Jan 19, 2013 7:30 pm

alp wrote:What's "good" about these reads?
Hmmm, a provocative reply. . . .

However, you are correct to pick me up on this.
Everyone one will have their own definition of the word “goodâ€
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alp
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Post by alp » Sun Jan 20, 2013 8:35 am

[quote="rhc"]The two links that I mentioned above contain a spirited discussion on the “Essentialsâ€

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