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LEARN FROM GENERALS OF THE MARKETS – PART 34
“There’s no doubt that the RRR is tremendously important. To get big profits, you have to take minor risks.” – Larry Williams
Emilio Tomasini is an Italian Professor of Corporate Finance at University of Bologna, and he’s a full time market speculator, trading several financial markets. He founded LombardReport.com, which is a renowned online newspaper for serious investors and traders. He also serves as a consultant to top traders. He’s a former columnist at TRADERS’. Now he manages and directs other trading publications. He’s still a regular columnist and an author of best-selling books. His articles are full of funny but factual trading ideas. His website is: Emiliotomasini.com
Lessons
Professor Emilio is best understood by visiting his website and reading his past articles. However here are few of the numerous lessons that can be learned from him:
1. You can have fun while trading – real fun. Professor Emilio has an unusual sense of humor which is often evident in his articles. Trading, as a fantastic way of life, is worth enjoying.
2. Traders of nowadays are lucky because they’ve sophisticated technologies and great trading facilities at their disposal. Many decades ago, these things were not available and the pieces of price data available then were few and far between. Trading conditions were not as favorable as they’re today. Nevertheless, successful traders existed in those days. If there were those who succeeded in those days in spite of harsh conditions, why can’t you succeed with all the trading facilities and technologies at your disposal? You now have access to real-time data that comes to you at the speed of light. For instance, there are great pieces of trading software out there. One of the most popular among Forex traders is the Meta Trader.
3. Are you a systematic trader or a discretionary trader? Systematic traders hate discretionary trading methods while discretionary traders abhor systematic trading methods. Each camp has certain advantages and disadvantages: both camps can be successful if they control their risk.
4. Talking about the biggest names in the trading world, like David Tepper, Paul Tudor Jones and others, we know it’s inspiring and encouraging reading about them and their mindset and trading approaches. However, it also pays if we pay attention on being the best traders we can be. If you concentrate on being the best trader, perhaps you can become a big name in future.
5. Making money is easy, but retaining it is difficult. With the control of the uncertainty in your trading, you can give up as little as possible in your profit, and as such, you’ll later recover your profits and move on.
6. One of the major problems in trading is that most traders don’t have enough money to invest. That’s why we’re always under pressure to use aggressive money management so that our small portfolios can double quickly. Do you want to make $100,000 per annum? For a trader who has a capital of $1,000,000, that’s pretty possible because he just have to make only 10% returns per annum. But someone whose capital is only $5000 would need to make about 2000% before he she/he can go home with $100,000 per annum. Can you see why some find trading difficult?
7. The bigger the lot sizes you use, the bigger your profits when there is positivity, but the bigger the roll-downs when there is negativity. Since we’re not absolutely sure of what the next candle would be: Some charting technique that gives some readings in a bear market may have completely different readings in a bull market. The greatest risk control can’t force a negative position to turn to positivity when the market has not moved determinedly in your favor. When your lot sizes aren’t too big and you’re conservative about your risk, you’ll eventually be paid by the markets.
Conclusion: One mentor once told me this: ‘If it’s not painful, it can’t be gainful.” How true is this statement in trading and in other spheres of human endeavors?
I’d like to conclude this article with a quote from Professor Emilio:
“A good money management can improve the results of your trading system. So you need not have a superb trading system to make money. In the long term, it’s enough to have a stable strategy with positive expectancy and a proper money management.”
Ground-breaking lessons from expert traders: http://www.harriman-house.com/experttraders
