Most of what Jim Cramer has to say nowadays becomes fodder for ridicule in my newsletter. The truth, however, is that before he became a media maniac he was a tremendously successful trader. So hidden in his gobs of nonsense are occassional gems. Years ago I heard him talk about the note-to-self he kept posted on his monitor that read "discipline > conviction." Clearly the guy was aware of his own ego and it's ability to sabotage his performance. At the moment he felt himself extending his middle finger to the screen and loading an order to double-down, there that note would be staring back at him. A simple, though I suspect powerful, manual override.
We all have a weakness, a tendency, a bad habit that threatens to destroy us as traders. Even the very best. It's a gimmicky enough suggestion to not be taken seriously, but I've found the Post-it mantra on the monitor to be the single most effective weapon against my own fallibility. I tend to be a nervous trader. It's part of what makes me good; the constant fear of the mugger around the corner about to leap out and stick a gun in my face. I'm always calculating and never comfortable. The downside of this trait is that when things are actually going wrong for me, I tend to get wrapped up in the pain of my positions and lose sight of the potential for fresh trades that the market is generating. So my Post-it simply reads: STO. It's not necessary to encode it in an acronym, but I get a kick out of the fact that I'm the only one that knows STO means "see the opportunity" (well, now the secret's out).
The point is to know yourself, which you probably already do. Then try to distill your weakness into one short piece of advice that you want to give yourself every time your demons get loose. Write it down and stick it to your monitor. I've known many types of traders. Some are way too aggressive and deploy capital too easily. They might need to be reminded to "save their bullets." Others get committed to bad trades and can't take losses and move on. They need to "take out their trash" or "lay down their swords." Figure your's out and give it a try. I know a simple little trick like this amidst the complexity of capital markets might seem crazy, but it's a difference maker in those emotional moments when you need it most. Cramer might be a genius in disguise after all.
by Brian Thomas for varsityinvestor.com
