really sees them. He has often toldme things about myself and my trading that I haven'twanted to hear, but after considering his advice, I found agreat deal of truth and direction in it.
Bruce is among the handful of traders whose work andprofessionalism I thoroughly respect.
A Biographical Sketch
Bruce Babcock grew up in New York and attended YaleUniversity and the University of California at Berkeley. Hereceived his bachelor’s degree in business administration aswell as a law degree. After a successful career as a federalprosecutor, he left his law office in 1979 at age 35 to concen-trate on commodity trading.
Bruce has written six commodity trading books, includ-ing The Business One Irwin Guide to Trading Systems andTrendiness in the Futures Markets. He has had numerousarticles published in Futures magazine and Technical Analy-sis of Stocks and Commodities. In 1983 Bruce started publish-ing Commodity Traders Consumer Report, a bimonthly news-letter that tracks the performance of the top commodityadvisory services and makes a significant impact on theindustry. He also publishes Major Moves, a long-term, spe-cial situation advisory letter. Bruce has designed numerouscomputer software programs for traders, including
5/ Bruce Babcock ¢ 49
optimizable trading system programs, trading tools and adata management program for using continuous contracts.
Bruce’s work has been featured in The Wall Street Journal,Barron's, Forbes and Money magazine. He has appearedfrequently on the Financial News Network and is an occa-sional seminar sponsor and speaker.
Anactive commodity trader since 1975, Bruce continuesto trade the markets for his own account and actively pur-sues his futures market research.
ll,
Interview with Bruce Babcock
What precipitated your desire to trade, and when?
In 1975, I changed stockbrokers. I was 32 years old at thetime, single and a federal prosecutor by profession. Mynew broker thought my financial profile would allow meto speculate a little more. He suggested I trade somecommodities. He told me that an associate in his officewasa pretty good trader, that he would follow his ideas.I said, “Fine.”
My first trade was in potatoes, although, truthfully, Ican’t remember whether I won or lost. Since I wanted tolearn about how my money was being invested, I startedreading about commodity trading. It became more andmore fascinating. I soon opened an account with a spe-cialized commodity broker and started calling my ownshots.
 
What qualities do you feel contributed most to your successas a trader?
My natural aversion to risk and to gambling helped keepme from bankrupting myself while I learned how to50 ¢ Market Masters 5 / Bruce Babcock ¢ 51
conventional wisdom—not to become too elated during
trade. My skepticism, analytical ability and logical mindgood periods or too depressed during bad periods.
enabled me to sift through all the misinformation anddiscover the truth about profitable commodity trading.
It took a very long time, however—over ten years. Estimate what percentage of a trader's success is a direct
result of a good system as opposed to trading skills. WhatDo you use specific techniques for coping with losses? would be the split?
Yes. I have learned that I trade better when I isolatemyself from my trading as much as possible.
Virtually all my trading is accomplished with computer-ized, mechanical systems. My own software, which | sellto the public, generates all the trading signals. By theway, I hold nothing back from my customers. I have nosecret methods I keep to myself. Every system | use isavailable at a very reasonable price. Customers are freeto trade exactly like I do.
My broker has a copy of my software programs. He runsthe software himself, generates the trading signals andputs in the orders. Although we talk every once in awhile, he can trade my systems on his own without anyinput from me.
When I am in town, I run my software myself and printout the signals to keep up with what is going on. WhenI travel, which I do frequently, I don’t worry about mysystems until I return.
I don’t re-optimize or change my systems. Occasionally,I may add or delete a market from the portfolio that Itrade. As my account increases, | may add new systemsor additional contracts. | would allow myself to discarda system that does not perform, although I have not donethis for three years.
Since I watch what goes on in the markets, | am aware oflosses. But I don’t dwell on how big they are or what ishappening to the equity in my account. | try to follow the
 
Iam not sure exactly what you mean by this question. |see an ambiguity between someone who is using asystem, yet at the same time applying “trading skills.” Ifsomeone is trading with judgment, by my definition heis not using a system.
1 will assume your successful trader is following a me-chanical system. If that is the case, I suggest that one-third of his success would be the result of the quality ofhis system. One-third would be the result of his choice ofmarkets to trade and keeping the size of his portfolio inline with his available capital. The remaining one-thirdwould reflect his ability to trade the system religiouslyfor a number of years. The correct choice of system andportfolio would give him a statistical advantage. Thediscipline to trade the system long enough would ensurethat he could realize his statistical advantage.
How did your previous career as a trial attorney influenceyour skills as a trader... if at all?
This is a question I have never been asked before. I havethought carefully about the skills necessary to be a goodtrial lawyer. None of them except perhaps organiza-tional ability seems useful for trading as I conduct it.
A good trial lawyer is well-organized. He can organizethe facts of his case in a way that helps him easily retrievethem and explain the case to a jury that comes to thecourthouse with no previous knowledge. A good traderis well-organized in the sense that he assembles the factshe needs to make proper trading decisions.52 Market Masters
A good trial lawyer can think quickly “on his feet.” He isable to respond to surprises. This may apply to thosewho trade with judgment but not to those like me whotrade with a system.
A good trial lawyer has excellent common sense. Thishelps him evaluate the likely veracity of testimony andknow how to counter it, if necessary. Common sense isnot very useful for trading. What appears to make goodsense is invariably wrong.
A good trial lawyer is a good speaker and a good actor.He can conceal his true feelings if necessary and makethe case interesting for the judge orjury. Neither glibnessnor acting ability will help a trader do anything butdisguise or explain away his failures.
Finally, a good trial lawyer is persuasive. He knows howto present a case and argue its merits in a way that“pushes the right buttons” for the judge or jury. He isable to convince them to decide the case in his favor. Thisability has no relevance to trading.
What do you feel is the single greatest skill a trader canpossess or develop?
This is a difficult question. Obviously, there are a num-ber of different skills that a trader needs in order to besuccessful. They are all important. If had to pickjust onethat is most important, | would say it is the ability toperceive true reality.
Unsuccessful traders have a distorted view of the mar-kets, themselves and what they are really doing whenthey trade. It is difficult for them to shed these miscon-ceptions, so they are doomed to long-term failure.
The whole market universe is constructed in a way thatreinforces their misconceptions. This compounds thechallenge of overcoming them.
5/ Bruce Babcock ¢ 53
Do you feel that your success was inspired by any famoustraders? If so, who, and how so?
Certainly, I learned many things from the famous trad-ers whom I have known and whose work I have readover the years. However, I can’t think of a single famoustrader who trades like I do. Nor was there any famousperson who inspired me to start trading or keep tradingafter an unsuccessful period. Thus, it would be hard forme to single out any one person as having inspired mysuccess.
Are you in touch with any specific experiences that eitherfacilitated or inhibited your trading success?
Ican recall two especially large losing experiences. Bothinvolved trading without a stop.
In one case, I was trading the yield curve with T-billspreads. They were at an all-time historically low level,sol keptaveraging down. Eventually, | gave up and tooka huge loss. This taught me, I hope, never to averagedown and never to bank on historical price extremes asa barrier.
In the other case, I was holding a very large profitableposition with a trailing stop loss to protect profits. 1convinced myself to remove the stop loss withoutat leastreplacing it with another further away. The market madea historically large move in a short period of time andcost me a great deal of money. I learned from that neverto trade without a stop in the market.
My learning process was evolutionary rather than revo-lutionary. Therefore, I can’t really pinpoint any specificpositive experiences that had a great influence on myprogress. My first really big score was in the silvermarket in 1979 and 1980. At that point, I had quit lawpractice and was pursuing trading full-time. Those prof-its helped me continue my trading career.54 Market Masters
As part of your business, you market trading systems, Towhat extent do you feel that a good trading system isimportant for success?
For many years, I have thought that the only chance aperson has to be consistently profitable in the long termis to use a mechanical system. Only the most exceptionalindividuals have the ability consistently to overcome theemotional influences that prevent long-term profits. Thatwas the underlying premise of my book, The Dow Jones-Irwin Guide to Trading Systems, now called The BusinessOne Irwin Guide to Trading Systems.
Stated another way, it is virtually impossible to consis-tently trade with the trend, cut losses short and let profitsrun without depending on a mechanical system. Win-ning traders may not all use a computer to generate theirentries and exits, but they probably use a mechanicalsystem in their head.
The more a person trades without fixed rules, the lesschance he or she has to be profitable over a multi-yearperiod. Trading without fixed rules enhances the chancesthat a person will be trading with losing methods thatover time give him or her a statistical disadvantage.Furthermore, trading without fixed rules allows emo-tional factors to influence trading decisions. This willusually result in bad decisions.
If you had to choose between discipline as a trader and agood trading system but could only choose one of these,which would it be, and why?
This is a false choice. If someone has a good tradingsystem but no discipline, he or she will not follow thatsystem. Having the system will be meaningless. If atrader has perfect discipline but no method to follow ina disciplined way, success will depend on luck.
 
5/ Bruce Babcock @ 55
If absolutely required to choose, I would choose thediscipline to keep losses small. If a trader could do onlythat, he or she might stumble on enough winning tradesto make some money. But I wouldn't bet on it.
ll,
Analysis of Bruce Babcock’s Interview
Qualities Needed for Success
Clearly, Bruce favors the control of risk as a primaryingredient to success in futures trading. He points out theneed to avoid the gambling impulse. Perhaps the mostimportant aspect of his response is that he stresses the valueof having an analytical and skeptical mind. As all tradersknow, there is a tremendous amount of misinformation inthe futures arena. Literally hundreds of trading systems,methods and indicators exist, a vast majority of which do notwork and never will. Bruce feels that the ability to separatethe good from the bad, the profitable from the unprofitable,is a major asset on the road to success.
Coping with Losses
Isolation is the key to mastering futures trading accord-ing to Bruce. Here again, Bruce stresses the value of disci-pline, organization and a logical methodology to avoid thenegative emotional consequences that accompany losses.He points out the value of having the assistance of a brokertohelp him manage his systems when he travels. The tone ofBruce’s response appears somewhat unfeeling and insensi-tive. Yet have known Bruce long enough to understand thatheis anything but cold. This aspect of his trading personalityis an asset. When it comes to futures trading, and in particu-lar to implementing systems and dealing with losses, atrader must be somewhat unfeeling.56 Market Masters
A Good System Versus Trading Skills
Here Bruce attributes one-third to the value of a system,one-third to the result of trading choices and one-third to theability of a trader. He uses the word religiously in relation tothe application of a trading system. His response leaves nodoubt whatsoever that a system, if it is systematic, must befollowed perfectly for it to succeed.
Applying Skills of an Attorney
As a trial attorney, Bruce was required to be organizedand disciplined. Hence, his training in that field was excel-lent preparation for his career as a trader, Note, however,Bruce’s statement that having common sense may be detri-mental to the success of a trader. This is often the case. Oftenlogic and scientific reasoning do not point the way to suc-cess. What works, works, because it works. It is not possibleto predetermine whether a system will work or whether anindicator is any good. The test of its results will be theultimate determinant ofits value. Again we see the logic thatis typical of Bruce Babcock.
Experiences That Help or Hinder
It has been said that traders often learn more from theirlosses than from their profits. Bruce confirms this assertionby discussing two of his worst losses. He notes that hislearning process was evolutionary, namely it evolved frommany experiences as opposed to specific experiences that“changed” his life.
Systems and Success
Bruce echoes the opinion of all the market masters inter-viewed. He points out the importance of a mechanicalsystem whether it is computerized or not. The value of fixedrules is twofold. First, rules tell you what to do, and secondand perhaps even more important, they help you maintainorganization and discipline.
 
5/ Bruce Babcock ¢ 57
Discipline
Clearly, Bruce is in favor of maintaining a strong tradingdiscipline as are all the market masters interviewed. Theessence of what Bruce says about discipline is that it must also becombined with a good trading system. Discipline alone will notmake you a successful trader.
ll,Conclusion
Bruce Babcock has given us many valuable insights as tohow traders can increase their odds for success. GivenBruce’s years of experience both as trader and observer ofother traders, his openness and willingness to share ideaswith us was refreshing and appreciated. Bruce’s pragmaticand performance-oriented thinking should serve as a lessonto all traders.120 ¢ Market Masters
Patience
One important theme that underlies each interview is:Patience is paramount if trading systems are to be effective. Theability to wait for trades is very important since lack ofpatience frequently causes traders to take profits and lossestoo soon, thereby circumventing the value of their tradingsystems or methods.
Patience is important in the overall formula for successbecause most trading systems take time to work. The suc-cessful trader must be willing to await not only each indi-vidual trade but the trading system as a whole. As youknow, it is not uncommon for trading systems to take anumber of sequential losses before they begin to work. If atrader is impatient about waiting for the trading system towork, this will undermine the overall effectiveness of theprogram and thereby the success of the trader.
YN
Patience is paramount if tradingsystems are to be effective.
_
Losses
Another theme that pervades the commentary of ourexperts is the importance of taking losses promptly andaccording to the system or method. Losses must be takenwhen the system indicates. And, as pointed out by thecommentaries, losses must be kept toa minimum. WhileIdonot wish to dwell on the obvious, it is important to realizethat losses must be prepared for in advance, and oncerecognized, they must be cut short as quickly as possible.The trader who is following his or her trading system to theletter will be quick to take losses when they must be taken.
 
11 / The Keys to Success as a Trader @ 121
As Welles Wilder said, “doing the right things” is veryimportant if a person wants to realize the largest profit andthe smallest loss from the trading system.
a
Losses must be taken when thesystem indicates.
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Perseverance
Perseverance refers to the ability to persist with the trad-ing system or method in spite of the fact that the systemtemporarily may not be functioning as expected. One ofthe single most important qualities for success that a trad-er can possess is the ability to persist and to persevere. Allthe experts agreed on the value of perseverance. Certainlythis quality ranks uppermost in contributing to the successof a trader.
itllOne of the single most importantqualities for success ... is the ability topersist and to persevere.
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My Time-Tested Procedures
I cannot overemphasize that great traders are greatbecause they have mastered the discipline of trading as wellas its mechanical aspects. I've placed great emphasis ondiscipline. Since discipline is undoubtedly the weak link in60 ¢ Market Masters
George was overjoyed to grant me the interview since healways has something to say and is always willing to sharehis point of view in the hope that others will benefit. Manyyears ago George was referred to as “crazy like a fox.”Indeed he is just that. Behind his well-groomed white beardand cowboy hat are years of experience. Behind what somemay once have considered worthless ideas about the futuresmarkets is a man with a great depth of self-understanding,a man with significant market knowledge, a man who isboth shrewd and calculating when applying his wisdom tofutures trading. George walks softly but carries a big stickwhen it comes to futures trading.
A Biographical Sketch
George Lane received his training in the investment fieldat the E.F, Hutton school in New York in 1953. Upon hisreturn to Chicago, George became a professional trader. Hejoined the staff of Investment Educators, where he taughtstock market seminars and commodity courses. He and hisresearch groups have developed technical indicators fortrading the markets and originated indicators, such as %K,%D and the stochastic process (Lane’s Stochastics).
In 1963, George bought a seat on the Mid-AmericaCommodity Exchange (then called the Chicago Open Boardof Trade), and served on its board of directors in 1965. Thatsame year he formed a partnership, Miller-Lane & Co. For11 years George wrote a daily market letter for his firm. Heretired from Miller-Lane in 1974. ‘
In 1977, three former employees asked him to help builda new firm. Four years, 14 states and 47 branch offices later,George had taught thousands of farmers, ranchers and bank-ers how to use the futures markets as a profit-making tool.
Until 1984, George served as research director fora thirdbrokerage firm. He has written four commodity tradingcourses and a book entitled Using Stochastics, Cycles and RSI.He has been published in The Market Technicians AssociationJournal and Stocks & Commodities and is featured regularly in
6 / George Lane @ 61
Consensus. He has been interviewed by Futures, FinancialNews Network and Channel 26 in Chicago. He has taughtnumerous workshops on technical analysis.
shore ebAn Interview with George Lane
What precipitated your desire to trade, and when?
Well, I was working for E.F. Hutton, the stock markethad died and I was wandering about town buying a tieand bumming around downtown. | wandered into aplace and found a bunch of guys screaming and yellingand jumping around. It was the Chicago Open Boardof Trade. I was fascinated; | sat there and watched. Anolder mancame over and took me into the office and soldmea membership for $25. | was a member of acommodi-ties exchange. | could come over there and trade. It waskind of an accident.
And you didn't know anything about it?
I didn’t know it existed until that day. Itwas kind of quietin those days. I think yearly range of the hottest com-modity, which was corn at that time that first year that Itraded, was 23 cents. So things were kind of quiet.Markets never moved more than a cent and a quarter aday, and that was kind of nice because the margin wasalmost nonexistent. I mean, you come in for $20 and putit in the cashier’s cage and go out and trade 200,000bushels of corn. There was no risk to the brokers, so themargin was very small.
What qualities do you feel contributed most to your successas a trader?
Iwasvery lucky. WhenI got there, the average age of thatexchange was about 85. They hadn’t sold a membership
 62 # Market Masters
for seven or eight years. The Board of Trade hadn’t soldamembership for fourorfive years. After | arrived, thingslivened up. I was at the right place at the right time, andI learned the trade when it was quiet and easy and grewwith the volatility of the exchange. I was just lucky.
We were teaching stock market courses at the time. Theman I was working for advertised ... we started teachingcommodity courses ... we advertised that if you’d cometake my course, why we'd cut your commissions in half.Gee, the round-turn commissions in those days wereonly $2.50, and all he did was buy a whole bunch ofmemberships at the Mid-Am and then give them to thepeople who took the course. Well, here all of asudden atthe Mid-America, we sold 175 memberships that werelying dormant in the treasury. Nobody had even ex-pressed an interest in them. That got the Board of Tradeall excited, and they ran over there to find out what Mid-America was doing that day. All of a sudden a lot ofyoung people came in. Those old-timers were prettyappreciative. We kind of saved the exchange, I guess.And they took me under their wing and helped. And soI had two or three old-timers, fellows who had never hada losing week in ten years.
So you really were lucky?
Yeah, and I was lucky. They said, “Kid, if you don’tstraighten out, you're not going to make it.” And theytook me aside and helped a lot. That’s what you needwhen you first start in any business. Some old-timer hasto help you out.
Do you use specific techniques for coping with losses?
We use very close stops. With 28 years on the floortrading, fairly short-term for 45 years, I don’t keep posi-tions long. That's because I was there on the floor. On the
 
6 / George Lane @ 63
floor, if it goes against you a little bit, you're out. I learn-ed early that we don’t take very big losses. And evennowadays we only trade mostly intra-day and, like incurrencies, our losses are limited to $60. So I think if youcontrol your losses and make them small, you’re boundto make money in commodities. The biggest error thatyou have in commodities is letting yourself have biglosses. And even with trading the S&P now, we limitour losses to $225. We just don’t take a trade where therisk is greater.
Estimate what percentage of a trader's success is a directresult of a good system as opposed to trading skills. Whatwould be the split?
Overthe years, we have learned some systems or tradingskills from other people, and we developed a few of ourown and adapted some to our own personalities. As faras I’m concerned, we have an approach or a system, andthat is almost 100 percent of our success now.
You are credited with having popularized the stochasticindicator, which has become by far one of the most widelyfollowed timing indicators ever. Do you feel that tradershave applied your timing methods consistently? If not, thenhow would you rectify the situation?
Stochastics can be used by newcomers, amateurs andprofessionals who don’t really 100 percent understandit, and it will still work to a certain extent. But stochasticsis just a little bit more sophisticated than just taking aquick look at it. It’s a good overbought and an oversold.So I’m spending my declining years teaching at a schoolhere in this little country town where I live. We teach afive-hour course in stochastics so the people can learn itssophisticated nuances. When you get that down, why,it’s a fantastic tool.64 ¢ Market Masters
Is it easily understood?
Yes. I have had no trouble. It just takes oh, three and ahalf, four hours to go overall the details. Most everybodygrabs it.
As a veteran trader of many years, what is the single mostmeaningful lesson you've learned?
Oh, boy. Patience. Patience and stop losses. Limit yourlosses, and have patience trading. Everybody thinkscommodities are so fast and furious. Actually a lot of thetimes, like flying an airplane, you just sit there bored todeath, then there’s the stark-raving fear when the propquits turning. And in commodities, it’s the same way.You’re bored hour after hour. Then all of a suddensomething happens, and you must have the ability totake advantage of it.
Everyone wants to make a fast buck in a day.
That’s wrong. It’s absolutely wrong. I’ve seen thousandsof kids do that. The real winner is the fellow who consis-tently makes money, who watches the market, studies itand takes mediocre and small profits.
Do you feel that your success was inspired by any famoustraders? If so, who, and how so?
Richard Det has helped a lot. He taught some courses atMid-America. It kind of straightened a lot of people out.He's a natural trader and, gosh, we studied everybodywho we've ever read. Jake, you helped a lot. A lot ofpeople have contributed to my education.
Are you in touch with any specific experiences that eitherfacilitated or inhibited your trading success?
Yeah. One time I lost $85,000 one afternoon just becauseI got stubborn. And I was going to push the market. |
 
6 / George Lane @ 65
learned on that day that it does not work. I was also verylucky—we got in on the bull side of that Russian graindeal. It took a fabulous fortune out of that market. Andso I've learned that there are about five to eight bigprofitable markets a year. And if the person will just waitpatiently and spend several hours every week studyingthe monthlies and the weeklies and the long-terms andgetinto these markets early, there are several timesa yearthat an absolute fortune can be made. But it does requirea tremendous amount of patience. Sometimes it takesmonths before a market gets going.
Do you feel that emotion is an asset or a liability insuccessful trading?
Emotion isa liability. You must control your emotions. Ithink that better traders don’t have much emotion, orthey just don’t show it.
If you had to do things all over again, knowing what youknow now about trading, what would you do differently inregard to this business?
I think I would take the money out of the markets. Tomake over a million dollars and to leave it in there andkeep trading it, I think, is foolish. I would take it out andput it in investments and stock it away somewhere.
lll.
Analysis of George Lane’s Interview
 
Georgeis especially candid in his interview. I feel that hisresponses come straight from the heart. But that’s not un-usual for George, who I have always known to be a down-to-earth, “no-holds-barred” person.66 ¢ Market Masters
The Desire To Trade
George “fell” into the futures markets by accident as didso many of us. In this respect, George’s answer is not toodifferent from other market expert's replies. George is trulya veteran trader. When he made his first futures trademarket, volatility was so very small that margin require-ments were extremely small as well. His longevity as afutures trader makes his responses more credible and valu-able than if he had been a novice.
Qualities Needed for Success
At first, George seems to attribute his success to luckrather than his qualities. Yet he goes on to state that severalseasoned traders took him under their wing. On furtherquestioning, George again refers to the importance of get-ting help from an “old timer,” a seasoned veteran, which, ofcourse, now applies to George as well.
Coping with Losses
George offers the same sage advice as do most of ourmarket masters: Keep your losses small. I totally agree. Thebest way to cope with a loss is to anticipate the loss and tokeep itsmall. In so doing you will not have difficulty coping!
A Good System Versus Trading Skills
George’s response indicates the voice of experience. Hesays that he adapts systems to “suit” his personality. Inotherwords, he looks long and hard for systems that will fit hispersonality. This is yet another approach to discipline. If youfind a system that fits your style, the system will be mucheasier to follow. George has fine-tuned this process, aftermany years, to the extent that he now considers it nearly 100percent of his success. But remember, it took George manyyears to get to this point.
 
6 / George Lane @ 67
Consistent Application of Your Timing Methods
The stochastic indicatoris truly animportant tool ifusedconsistently. Naturally, George wants to promote and teachstochastics since it is the tool with which he is most closelyassociated.
Most Meaningful Lesson
George’s response concerning his greatest lesson echoesthe opinion expressed almost unanimously by our experts:Patience. Patience and stop losses. And his advice is well taken.In response to my comment that everyone wants to make afast buck in a day, George disagreed, almost vehemently.The real winner is the fellow who consistently makes money andwatches the market, studies it and takes mediocre and small profits.
Influenced by Famous Traders?
I'm honored that George chose to mention my name inresponse to my query concerning who influenced him. Theessence of George’s response is that many helped him alongthe road. Learning how to be successful is very much anindividual matter, as I’ve stated previously. Hence, eachtrader must find his or her own niche, teacher and system.
Experiences That Help or Hinder
George’s response on experiences is a classic! He notesthat his single most valuable lesson wasa large loss. And heis not alone in his opinion. In fact, it bears repeating:
... I’ve learned that there are about five to eight big profitablemarkets a year. And if the person will just wait patiently and spendseveral hours every week studying the monthlies and the weekliesand the long-terms and get into these markets early, there areseveral times a year that an absolute fortune can be made. But itdoes require a tremendous amount of patience. Sometimes it takesmonths before a market gets going.68 ¢ Market Masters
So you must exhibit patience and know your marketsto recognize and take advantage of opportunities when theypresent themselves. Being stubborn can cost you huge losses.
Emotion—Asset or Liability?
Concerning emotion, George succinctly states that emo-tion is a liability. Clearly, this underscores the value ofemotional self-control as one of the key ingredients to suc-cess. If you allow your emotions to control your thoughts,you will surely be a loser!
HindsightIn my first book, The Investor’s Quotient, I state that it is
important to take money out of the markets whenevertrading is profitable. There are two reasons for this strategy:
1, Itis important to reward yourself for good performance.
2. Itis important to build up a cash inventory that you mayneed in the future if you experience a