Wednesdays with Wyckoff: Mental Poise and Calm

In his writings, Richard Wyckoff has a penchant for colorful imagery that makes it more fun to learn the concepts than a standard academic textbook.

Today’s entry in the “Wednesday with Wyckoff” educational series includes one of his more colorful descriptions of how a trader should adopt a calm mindset and react to opportunities as they develop.

In discussing “Obstacles to Overcome” in his book Studies in Tape Reading, we are treated with the following insights (and imagery about an omelet):

“Mental Poise is an indispensable factor in [trading].  The mind should be absolutely free to concentrate on the work; there should be no feeling that certain things are to be accomplished within a given time [pressure]; no fear, anxiety, or ambition.”

“When a [trader] has his emotions in hand, he will play as though the game were dominoes.  When anything interferes with this attitude, it should be eliminated.  If, for example, there be an unusual series of losses, the trader [should] suspend operations until he discovers the cause.”

“Anxiety to make a record, to avoid losses, to secure a certain profit for the day will greatly warp the judgment and lead to a low percentage of profits.”

“[Trading/Tape Reading] is a good deal like laying eggs.  If the hen is not left to pick up the necessary foods and retire to peace in her nest, she will not produce properly.  If she is worried by dogs or small boys, or tries to lay seven eggs out of a material for six, the net proceeds may look like a [scrambled] omelet!”

“Thus, the Tape Reader/Trader’s profits should develop naturally.  He should buy or sell because it is the thing to do – not because he wants to make a profit or fears to make a loss.”

I really couldn’t find a chart or current stock to bring this concept into the present day – it speaks for itself and regards trader psychology.

Remember, Wyckoff wrote in the 1930s and he had insights far ahead of his time. He is one of the early thinkers in trading/technical analysis – even though he was more of a “Tape Reader” (akin to Jesse Livermore) than a chartist (which – to him – would be a form of Point and Figure Charts, as he focused mainly on price and volume).

The imagery from today’s lesson includes dominoes and omelets.

If you’ve not read any of Wyckoff’s work, you’re in for a treat when you do!

See the prior “Wednesdays with Wyckoff” lessons below:

“How I Select a Stock for Investing”

“Trading a Stock Breaking Through Resistance”

“Trading in Dull Markets and Breakouts”

Corey Rosenbloom, CMT