Howard L. Simons directs the Trading and Energy tracks at the Illinois Institute of Technology's Center for Law & Financial Markets.
In addition to his CLFM duties , Mr. Simons is the Technical Editor of Futures magazine, for which he has written more than seventy articles since 1994. He also writes the weekly Futures Shock column for TheStreet.com.
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Do you want to be long (short), or don't you?
Unless you were engaging in an arbitrage strategy, the position you have in a market is more important than the price at which you entered.
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Are you hedging the dimes, or hedging the dollars?
Perfection is not the objective of a hedge strategy. Avoiding 80% of a major disaster is more important than worrying about the remaining 20%.
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Own the decision points.
Never structure a position so that someone else can force your exit. Every time you've written an option, either directly or embedded, you've surrendered control of your trade to someone without your best interests at heart.
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Smart generals run to the head of the troops.
The first objective of any trader is to find the path of least resistance, so follow the people who've found it. What good is a posthumous award for bravery? If you stay in the game, there's always tomorrow.
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Markets move further and faster than we ever believe.
Traders protect themselves against small setbacks, and bet the large ones won't happen. That's why they do.
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Being wrong is one thing, staying wrong is another.
Good traders take losses quickly.
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The price is the news.
Understanding why a move is happening has no effect on your equity.
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'Can't go there' and 'can't stay there' are two different things.
Markets can reach unsustainable valuations and remain there for some time before returning to rationality.
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The time to buy is when there's blood in the streets .
Someone else's, not yours. You can't buy the bottom if you've already lost all of your money.
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When you trade a sympathetic market, all you get is sympathy.
If you're in a bad Lucent trade, don't start messing with Nortel. You'll only make a simple problem worse .
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When you age bad wine, you get old bad wine.
Waiting for a position to reverse in your favor is a bad use of both mental and financial capital.
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Take care of the downside, and the upside will take care of itself.
If you know the worst that can befall you and are willing to accept it, time and volatility will work in your favor.
