Karma Trades

BTU making a cup and handle pattern with the last pullback. It showed good strength the past days and I expect it to go up and break the recent high, possibly above 3.00. Energy sector conditions will be critical for this setup.




CLF another energy play. It's flagging above the recent breakout area and seems likely to continue
upward.




NES, another flag setup. It hasn't close green yet, but when it does I expect it to resume its way up.




Another Oil play, OAS, of all this is the one that I like the least because of the range. It's forming a nice pullback and setting up for a breakout but there's a previous support area from early in the year which might act as resistance at 12.00.

Good Karma & Profit.

I've been reading many trading books this year and I thought that it would be a good idea to create a series of post about the most important lessons that I learned from those books and share it with other traders.

I will begin with one of the trading literature classics: Reminiscences of a Stock Operator by Edwin Lefevre. This book relates the story of legendary trader Jesse Livermore during the early 1900's.

Lessons:

1. Trading is Hard.Those who believe that trading is easy money always end up losing. Becoming a profitable trader is one of the most difficult endeavors any man can take; the road will be full of dificulties, frustration, losses and more frustration, but that's the only way to really learn and master the game of speculation.
2. The Market is Always the Same. While it might seem that the markets have radically changed from the time of the story, the truth is that the game of speculation has always been the same. That's because it's made up by the same players: Speculators, Insiders, Suckers, Manipulators, Bankers, Companies, etc. The shape of the market might have changed, but it's ways remain the same.
3. You have to learn to lose.  Jesse Livermore lost many times during his career, sometimes even millions of dollars in a short time. Knowing how and when to take a loss is vital for a trader.
4. Stock manipulation has always existed. Stock manipulators and promoters have always existed and will always exist. You have to be wary against extremely bullish or bearish articles, be wary against articles promoting that XYZ is the next big runner and even those who claim that their simple, easy to learn strategy will make you a millionaire! 
5. Trade your own way. Jesse Livermore hated the tips. Don't rely on someone else for your trades. You might take an idea from someone and see if it matches with your trading style & strategy, but never, never, never trade someone else tips blindly. The way to become a succesful trader is to find your own strategy.
6. Market conditions and general trend are more important than you think. Livermore started to have more success as a trader whe he began to pay attention to market conditions and general trend. From the book: “Obviously, the thing to do was to be bullish in a bull market and bearish in a bear market. Sounds silly, doesn’t it? But I had to grasp that general principle firmly before I saw that to put it into practice really meant to anticipate probabilities. It took me a long time to trade on those lines.” Sometimes many traders try to trade against the trend, losing many times. 
7. Big Money is made with big positions and big patience. Livermore realizes at some point that in order to make big money and go to the next level on his trading, he would need to stop beign a "piker" and and bet with bigger positions. This is true, but is also quite dangerous to do. Before you do it, you have to be ready and that means that you MUST have a winning strategy and enough capital to sustain the losses that will certainly occur.
8. Price Follows the Path of Least Resistance. Just like water, stock prices will go where theres is less resistance. It is your job as a trader to find that resistance and trade against it, that's the way that you gain an edge in the market.
9.  Sometimes, the worst enemy of a trader is himself. Traders are challenged with many psycological challenges along the way. External pressures, can wreak havoc in a trader's performance. So a trader must always come to the market with the right mindset and knowing that himself is not an obstacle to success.
10. Most traders fail.  This was perfectly clear by the end of the book, when the author mentions how Livermore and other legendary trader were unique in their own ways and even them made huge mistakes. Only a few will be able to beat the stock market and even them will likely fail at some point. Trading is a tough game.