Article The Paramouncy Principle

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Staff member
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Emotional Intelligence and the Trader
Why is it that 90 percent of traders who trade the markets fulltime fail to earn an adequate return even when using systems claiming 70 percent accuracy? Perhaps it is because traders do not recognize the importance of the Paramouncy Principle.
The Paramouncy Principle suggests that you are the most important variable in the trading equation. Not you, the dispassionate arbiter of
technical and fundamental analysis, but also you, the thinking, feeling, sentient being with all your human foibles, hopes and aspirations. Most traders lose money because they do not have an understanding of the markets or of themselves.
They trade without method, strategy or discipline. They fall prey to powerful emotion that leads to impulsivity and behaviors more akin to gambling than to genuine understanding. They give in to perceptual biases that lead to false conclusions and inappropriate actions.
Most Traders Focus on Method
A wide educational...
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Established member
689 8
Interesting read....

Although his take on the principles of alchemy are some what misguided regarding the esoteric lead into gold part ;)


Active member
206 4
This Article is worth your time to read , the Authority of Expertise-page 3 is so very very true the same people who lost the publics pension money in a 12 year Bull run, you will now see on the box, telling us all that we need to put more money into pensions !
The other parts of the Article show us the long road ahead for traders
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Experienced member
1,040 118
There is nothing inherently wrong with putting money into pensions.
The real issue is to put the money into things which grow rather than shrink.
The pension is just the 'container'; it is the funds or other instruments selected which are the key to success, failure or mediocrity.
Whether you choose them yourself or allow someone else to do it for you is up to you.
As you say, the 'experts' got it wrong although perhaps you mean the bear market after the bull run (?). And presumably you refer to equity investments.
They did not go into cash - in fact they are not allowed to do that to any large extent. They are required to stay invested with a large percentage of the money they manage.
But the choice the punter has is to take money out of funds/instruments at the right time instead of letting it sit there shrinking. Move it temporarily to a cash/money fund.
Get rid of losers and keep winners.
Equities have performed well over the past 2 years, so anyone who invested in March 2003 would be looking at around 40% gains. Many people have stayed out altogether after the big fall because "Markets climb a wall of worry". No doubt they will eventually decide to buy near the top. Nothing changes does it ?

"Never mistake a Bull market for skill".


Junior member
20 0
a320 said:
Interesting read....

Although his take on the principles of alchemy are some what misguided regarding the esoteric lead into gold part ;)
Lead= base/lower self (vehicle)
Gold= true/higher self

Not exactly a student of symbolism is our Mike


5 0
I like his interpretation of lead to gold because he isnt refering to esoterics or spiritual symbols. I think he is talking about the first steps historically in physical chemistry. It was in fact not sure what a320 means or thinks u missed the point.


Senior member
3,161 156
A good article. It would be better if the author explains how to development each of the abilities in more details.


1 0
Important article that helps demystify the "Market Wizards". Presents work towards facilitating the Trader identification of their strengths and weaknesses in Trading Skills, explaining very clear the relevance of Emotional Intelligence in the development of trader's skills.

Charge Down

5 0
Great article. I agree with your take on why traders fail. I have been one of those traders who in the past had a great system, 70% win ratio etc. but still could not be a profitable trader due to the factors that you mention in this article. Focussing on myself and my own mind together with regular theraphy sesisons has assisted me to turn the corner. However, when it comes to emotional intelligence I'm not sure I agree due to personal experience. For many years I traded next to a brilliant trader. He used to regularly double or triple his trading account each month. He was also a very volatile trader. He swore, screamed, banged his desk, threw his keyboard out the window, smashed his mouse and more. But then he came in calmly the next day and made all his money back and more. Some days he would only trade for ten minutes, other days he would trade all day. He did this for years and years. A brilliant and wealthy trader.
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