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The First Major Axiom:
Worry is not a sickness but a sign of health. If you are not worried, you are not risking enough.
Many of Wall Street's most celebrated players have said publicly that a state of almost constant worry is a part of their way of life.
BET AMOUNTS THAT WORRY YOU, IF ONLY A LITTLE.
Diversification, while reducing your risks, reduces by the same degree any hope you may have of getting rich.
The Second Major Axiom:
Always take your profit too soon. In my opinion this is wrong. A classic rule of trading is to ride your winner as long as possible.
A way to reinforce the 'ending' feeling is to rig up some kind of reward for yourself. A medal if you will. Promise yourself in advance that if and when you achieve your stated goal, you'll tale some of the winning and buy yourself a new car or whatever makes you happy. Maybe you will take your spouse out to a glamorous restaurant.
The Third Major Axiom:
When the ship starts to sink, don't pray. Jump.
In other words, use a stop loss.
The Fourth Major Axiom:
Human behaviour cannot be predicted. Distrust anyone who claims to know the future, however dimly.
In other words, don't listen to financial analysts or commentators.
The Fifth Major Axiom:
Chaos is not dangerous until it begins to look orderly.
In other words, charting will not predict the future.
Irving Fisher, a distinguished professor of economics at Yale, believed he had beaten the market by being smart (when he called the Wall Street Crash), when what had really happened was that he had been lucky.
The Sixth Major Axiom:
Avoid putting down roots. They impede motion.
In other words, don't get trapped by sentiments such as loyalty and nostalgia.
The Seventh Major Axiom:
A hunch can be trusted if it can be explained.
As a speculator you are likely to be hit by hunches frequently. Some will be strong and insistent. What should you do about them? Learn to use them if you can.
Many speculators studiously ignore their own hunches and laugh at other people's. They insist on backing all trades with facts and factlike material. If is often goofy material like charts - but to people in this group, it seems more trustworthy than hunches. They will often make a move even when their intuition is telling them strongly that the move is wrong. "The chart says it's right, and that's what I go by."
When a hunch hits you, the first thing you should do is ask whether a big enough library of data could exist in your mind to have generated that hunch.
If it's a hunch about silver (or Brexit!), have you absorbed a lot of knowledge about the metal and its complex interrelationship with other economic goings-on?
Never confuse a hunch with a hope : When you want something very much, you can all too easily talk yourself into believing it will happen.
The Eighth Major Axiom:
It is unlikely that God's plan for the universe includes making you rich.
Many pious people will say "God will protect me if things go really wrong."
Don't count on it! God may do much for you, but the one thing He plainly isn't concerned about is the size of your bank account. That's your problem. Yours alone.
The Ninth Major Axiom:
Optimism means expecting the best, but confidence means knowing how you will handle the worst. Never make a move if you are merely optimistic.
The Tenth Major Axiom:
Disregard the majority opinion. It is probably wrong.
Rene Descartes began his philosophy by doubting literally everything, including the existence of God, man, and himself.
The Eleventh Major Axiom:
If it doesn't pay off the first time, forget it.
If you lose money on a particular stock, don't revenge trade it. Move on!
The Twelfth Major Axiom:
Long-range plans engender the dangerous belief that the future is under control. It is important never to take your own long-range plans, or other people's seriously.
When you see opportunities, go for it. When you see danger, jump out of the way.
Don't lock yourself into long term investments. Nobody can predict the future.
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