Random Roger writes about Ten Essentials for investing (link). Nusbaum is experienced in managing other people's money for the long term. I find Nusbaum to be smart and wise, even when I may disagree with him. Wisdom is something that novice traders often lack, especially if the newcomer has early success.
Off the top of my head, here are concepts that can be helpful if not essential for traders:
* live to trade another day, with proper position sizing, and other risk management techniques such as stop-losses or hedging. Many novices jump in with both feet, and get carried out on their shields before they have a chance to find their sea legs.
* know yourself--there are a thousand successful ways to trade. Many traders will fail if they try to emulate a style that doesn't suit their personality, their time commitment, their lifestyle. If a person doesn't know themselves, the markets can be an expensive place to find out.
* hazard warning on headline news, pundits on TV, popular newsletters or blogs. While popular sources such as talking heads on TV do occasionally make good calls, there have been some horrible ones as well. The contrarian way is one successful way to trade (as is trend following), though a person needs to be careful because as the cliche goes: "everyone is now a contrarian," so sometimes the real contrary way to go is to follow the trend.
* A John Wooden-ism comes to mind: "don't confuse activity with achievement." Many novices fall into the indicator trap, looking at too many indicators and mostly get confused, rather than getting better and smarter. Many novices tend to overtrade, instead of waiting for a good pitch to hit, they swing at everything.
* markets are often a moving target. Once an indicator is published and popular, the indicator tends to lose effectiveness. If reading a particular book or using a particular indicator was the way to success, everyone would read the book, or use that indicator. If everyone has the same edge, no one has an edge over the other person.
That's it for now.
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