10 life lessons I've learned from the markets
By Brett Steenbarger
August 14, 2006 8:30 AM ET
Trading has taught me much more than patterns of supply and demand. It has provided a framework for thinking about life. Here are ten life lessons instilled by the markets:
1) Have a firm stop-loss point for all jobs, relationships, and personal involvements. Successful people are successful because they cut their losing experiences short and ride winning experiences.
2) Diversification works well in life and markets. Multiple, non-correlated sources of fulfillment make it easier to take risks in any one facet of life.
3) In life as in markets, chance truly favors those who are prepared to benefit. Failing to plan truly is planning to fail.
4) Success in trading and life comes from knowing your edge, pressing it when you have the opportunity, and sitting back when that edge is no longer present.
5) In all facets of life and investing, risks and rewards are proportional.
6) Happiness is the profit we harvest from life. All life's activities should provide a good return on investment.
7) With volatility comes opportunity. Always.
8) All trends and cycles come to an end. Who anticipates change, profits.
9) The worst decisions, in life and markets, come from extremes: overconfidence and a lack of confidence.
10) A formula for success in life and finance: never hold an investment that you would not be willing to purchase afresh today.
Brett N. Steenbarger, Ph.D.