IP Lesson 7 Flashcards
BIG IDEA : Why are beliefs significant in the production of consistently great results in trading ( and life! )
The common characteristic shared by every successful person in history is that they think differently from people who are not successful. This mindset and thinking style is characterized by being goal oriented and positive in mindset. A clear, defined image of success and your ideal world helps you to focus on and act on every opportunity to realize it.
Short answer : A positive, goal and success oriented mindset optimizes the mind and awareness to take advantage of opportunities and to create success.
BIG IDEA : Why is it important to understand the origin and nature of beliefs?
Beliefs are formed in response to our experiences, many of our early experiences contribute to our beliefs.
As beliefs accumulate in response to experience, behavior then reflects the beliefs - as beliefs are used as a short-hand to think and make decisions, the beliefs may not have anything to do with reality however, so beliefs should be actively cultivated to enhance my performance and ability to prosper and thrive in all aspects of life!
BIG IDEA : Why is it important to understand the difference between trading and investing?
It’s important to differentiate between trading and investing, investing is a different discipline. Investing is generally done on the basis of fundamentals and expected to weather the ups and downs of the market. In the case of trading, the fundamentals are irrelevant, and profiting from the ups and downs of the market is the point of the discipline, rather than the appreciation of the asset or it’s dividends.
Why should methods like dollar cost averaging generally not be used in trading?
Because they reflect the investment mindset.
Why is it that investment strategies might not be helpful in a trading strategy?
Investment requires discretion and thought to be effective and successful, whereas trading an edge requires that thought and discretion support the model, not act outside of it.
If your trading system is meant to be completely rational, why is it that belief in your system is important?
Belief in your system is 100% essential. Doubting the system can produce errors, while faith in the system will tend to improve consistency and results.
