The 21 Things a Trader Must Know (and Do)

06/26/2017 2:53 am EST

Focus: STRATEGIES

Jake Bernstein

Publisher, The Jake Bernstein Online Weekly Capital Markets Report and Analysis

CYA is an underlying principle when comes to trading and investing. Every broker needs a CYA. Every bank wants a CYA.  And every trader wants a CYA. Here are some new rules to protect yourself, writes Jake Bernstein in the first of a new weekly series.

We live in an age of CYA. CYA? Yes, CYA: cover your ass. Without intending to be crass but indeed being realistic and seeing things the way they really are, CYA is often the underlying principle that consumes so much time, effort, money, and attention in today’s business world.

When I bought my first house in the early 1980s the closing process was simple. I signed a five-page document. I paid the balance of the down payment. I signed the loan documents. I was in and out in 15 minutes.

I sold a property about a year ago. It took nearly 90 minutes. I signed about 27 times. The documents were in a binder, like a small book. The paperwork for the buyer, the mortgage broker, the title company, insurance company, the state, Internal Revenue Service, and others was immense. Everybody wanted a CYA.

CYA is also the underlying principle when comes to trading and investing. Every broker needs a CYA. Every bank wants a CYA.  And every trader wants a CYA.

“Past performance is not indicative of future results.” Were you thinking that perhaps future results would be guaranteed? Perhaps not. But still, you need to be reminded with a CYA just in case you forgot.

When it comes to trading, no boilerplate or mandatory warning will be your CYA. You have to CYA yourself. In order to do that you need some rules. But you’ve heard the rules before at least 100 times. By telling you the rules, the provider of the information and recommendations is off the hook. The responsibility is yours. Because you need to take care of your own CYA you need those rules! But those rules are boring, burnt out, overstated, misunderstood, misrepresented, poorly explained, and not necessarily true.

It’s time for a different take on the rules. It’s time to make the rules more meaningful. It’s time to explain and understand what that they really mean. It’s even time for new rules that go straight to the heart of the matter.

In this series, I will introduce my 21 rules which may help your CYA process more effectively than ever before. Why? Because I will look to the rules pragmatically and behaviorally...I will ask the question: “What do the rules truly mean psychologically and behaviorally?”

My rule number one at the very top of the list is this:

“Don’t trade anything that scares you.”

What kind of rule is that? You say you’ve never seen it before.  See the next installment of this report.

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