MANTRA

discipline for
25-POINT

The success that a trader achieves in the markets is directly correlated to one’s trading
discipline or lack thereof. Trading discipline is 90 percent of the game. The formula is
very simple:Trade with discipline and you will succeed; trade without discipline and you
will fail.

I have been a trader and member of the Chicago Board of Trade (CBOT) for 20 years.
During my successful pit-trading career as a scalper, I traded in three different contract
markets: 30-Year Treasury bonds at the CBOT, the S&P 500 at the Chicago Mercantile
Exchange (CME) and the Gilts at the London International Financial Futures Exchange
(LIFFE). Currently, I also trade the electronic $5 Dow futures contract on the CBOT as
time permits.

Although my formal academic education consists of a bachelor’s degree in business

administration from the University of Denver, I never considered myself to be an
extremely gifted student. I have no formal training in market technical analysis. I’m
unable to even set up a Fibonacci study or Moving Average study on a charting pack-
age, let alone know how to trade with such data. I have no formal training in market fun-
damental analysis. I don’t understand the economic causal relationship between the
actions of the Federal Open Market Committee and Treasury bond prices or equity
prices.

How, then, have I been able to succeed, day after day, trading the markets for more than
20 years? The answer is simple: I trade with discipline, and I respect the market. When
I’m wrong I get out immediately, and when I’m right, I don’t get too greedy. I’m content
with small winners and I’m accepting of small losers.

Just as I now mentor my trading clients regarding performance, discipline and

profit/loss management, I was mentored by one of the best traders ever to set foot on
the CBOT trading floor, David Goldberg. David was a long-time spread scalper in the
THE

wheat pit and a principal of Goldberg Bros., at the time one of the largest clearing firms
at the CBOT, CME and Chicago Board Options Exchange (CBOE). David taught me the
rules of trading discipline. I listened to his guidance and gradually, over time, became
more and more successful. The student has now become the teacher.

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 !"#$%&#'(")*%+,'-#)./"#
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# 13 17
DON’T WORRY C(I4$'(.'$'"(7.&'"-A##&(NI* NEVER TAKE !K'4-'("'$%'N("7K'-(lLB(lEB
ABOUT NEWS. -#( ,4.*( 'K'@A"#.%@( A"4&'"- # A BIG LOSS. ONLY lF9B( lFF( 4.&( lFL;( C/( *#7
IT’S HISTORY. K%-A'.( A#( #"( N4A@I( GW\GB A BIG LOSS CAN /#KK#N( 4.*( #.'( #/( AI'-'
30W\GB(\K##,)'"5(W'N-(#" HURT YOU. "7K'-(*#7(N%KK(.'$'"($%#K4A'
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# 18 MAKE A =I'.(C(N4-(4(*#7.5()#.&(A"4&Q
PI'(/4@A(%-V(PI'("'+#"A%.5(AI4A(*#7(I'4"(#.(AI'()7-%.'--(+"#5"4,-(%- LITTLE BIT '"B(,*(5#4K('$'"*(&4*(N4-(A#
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+"#/'--%#.4K(,4"O'A(+4"A%@%+4.A-(K#.5()'/#"'(AI'(^.'N-_(I4-()''.(&%-Q YOUR DITCHES. `:F;8LB( -#( %/( C( ,4&'( F9( A%@-
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THEM IN. `:F8;L9;

CA(,4*(.#A(-#7.&(K%O'(4(K#A(#/(,#.'*(A#(*#7B()7A(%A(-7"'K*(N4-(A#(,';

# 14 DON’T SPECULATE. C.(4KK(#/(AI'(*'4"-(AI4A 3*(,'.A#"B(J4$%&(k#K&)'"5B(A#K&(,'(AI4A(%/(C(@#7K&(,4O'(F9()#.&(A%@-

IF YOU DO, YOU C( I4$'( )''.( 4( A"4&'" '$'"*( A"4&%.5( &4*( #/( AI'( *'4"B( 4A( AI'( '.&( #/( AI'( *'4"( C( N#7K&( )'( 7+
WILL LOSE. 4.&( 4--#@%4A'&( N%AI `m8BL99(%.(,*(A"4&%.5(4@@#7.A;(W#A()4&(/#"(4(8:Q*'4"(#K&(O%&(%.(FnE8;
A"4&'"-B( C( I4$'( .'$'"( ,'A( 4
-7@@'--/7K( -+'@7K4A#";( CA( %-( %,+#--%)K'( A#( -+'@7K4A'( 4.&( @#.-%-A'.AK* CA(%-(4,46%.5(I#N(]7%@OK*(*#7"(A"4&%.5(4@@#7.A(N%KK()7%K&(7+(#$'"(A%,'
+"%.A(K4"5'(N%..'"-;(J#.RA()'(4(-+'@7K4A#";(\'(4(A"4&'"; c7-A()*(,4O%.5(4(K%AAK'()%A('$'"*(&4*;(C/(*#7(4"'(4(.'N('Q3%.%(0>! A"4&Q
'"(A"*(A#(,4O'(c7-A(L(#"(M(+#%.A-(+'"(&4*;(C/(*#7(@4.(&#(AI4A(*#7RKK(I4$'
0I#"AQA'",(-@4K+%.5(#/(AI'(,4"O'A-(%-(AI'(4.-N'";(PI'(+"#)4)%K%A*(#/(4 AI4A(`m8B999(4A(AI'('.&(#/(AI'(*'4";(
N%..%.5(&4*(#"(N''O(%-(5"'4AK*(%.@"'4-'&(%/(*#7(A"4&'(-I#"A(A'",V(-,4KK
N%..'"-(4.&('$'.(-,4KK'"(K#--'-;

# 19 HIT SINGLES d7-A(4-(C(&#.RA(O.#N(#/

NOT HOME RUNS. 4.*( -7@@'--/7K( -+'@7Q
K4A#"-B( C( &#.RA( O.#N( #/

# 15 LOVE TO LOSE PI%-("7K'(%-(AI'(#.'(AI4A(C(5'A 4.*( A"4&'"( NI#( 5#'-( %.A#( 4

MONEY. AI'(,#-A(]7'-A%#.-(4.&(/''&Q A"4&'('T+'@A%.5(A#(I%A(4(I#,'("7.(4.&(AI'.(4@A74KK*(I4$%.5(%A(I4++'.;
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#$'"( AI'( N#"K&;( P"4&'"-( 4-OB I75'(N%..'";(0#,'A%,'-(AI'*(A7".(#7A(AI4A(N4*B()7A(AI'(A%,'-(AI4A(C(I4$'
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# 20
H#N(.%@'(%-(%A(A#()'
CONSISTENCY
# 16 IF YOUR TRADE PI%-("7K'("'K4A'-(A#(AI' 4)K'( A#( A7".( #.
BUILDS CONFIDENCE
IS NOT GOING ANY- AI'#"*( #/( @4+%A4K AND CONTROL. *#7"( !G( %.( AI'
WHERE IN A GIVEN /K#N;( CA( %-( A"4&%.5 ,#".%.5( O.#N%.5
TIMEFRAME, IT’S @4+%A4K( AI4A( +7-I'-( 4 AI4A( %/( *#7( +K4*( )*( AI'
TIME TO EXIT. ,4"O'A( #.'( N4*( #" U7K'-B(A"4&'(N%AI(&%-@%+K%.'(4.&(-A%@O(A#(*#7"(,'AI#&#K#5*B(AI'(+"#)4Q
4.#AI'";( ?.( #$'"-7++K*( #" )%K%A*(#/(4(-7@@'--/7K(&4*(%-(I%5I;
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,4"O'A(7+;(?.(#$'"-7++K*(#/(-'KK(#"&'"-(N%KK(+7-I(AI'(,4"O'A(K#N'"; CR$'(I4&(*'4"-(NI'"'(C(@#7K&(@#7.A(#.(#.'(I4.&(AI'(.7,)'"(#/(K#-%.5
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=I'.( +"%@'( -A45.4A%#.( %-( +"'-'.A( X4-( A*+%@4KK*( I4++'.-( ,4.*( A%,'- 'TA"','K*(@#./%&'.AZ(C(O.'N(AI4A(C(N4-(5#%.5(A#(,4O'(,#.'*(#.(4.*
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+"'$4%K%.5()%&(4.&(#//'"; -%#.(N%AI(@#./%&'.@'(4.&(@#.A"#K;

S#7(&#.RA(N4.A(A#()'(%.(AI'(,4"O'A(4A(AI'-'(A%,'-;(PI'(,4"O'A(%-(.#A(5#%.5 U',',)'"( U7K'( lnV( C/( *#7( ,4O'( 4( K%AAK'( )%A( '$'"*( &4*B( AI'.( *#7( I4$'
4.*NI'"';(CA(%-(4(N4-A'(#/(A%,'B(@4+%A4K(4.&(',#A%#.4K('.'"5*;(CAR-(,7@I '4".'&( AI'( "%5IA( A#( A"4&'( )%55'";( PI7-B( )*( /#KK#N%.5( AI'( U7K'-( #/
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 21

!"#$%&#'(")*%+,'-#)./"#
# LEARN TO SWEAT PI'( .'A( '//'@A( #/
OUT (SCALE OUT) -@4K%.5(#7A(#/(*#7"
YOUR WINNERS. N%..'"-(N%KK()'(4.
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*#7"(K#--'-(A#(*#7"(+"'Q&'/%.'&("%-O(+4"4,'A'"-;
I can’t tell you
S#7(-I#7K&(.'$'"(-@4K'(#7A(#/(*#7"(K#-'"-;(C/(*#7"(A"4&'(-%6'(%-(,#"'(AI4.
how many times
4(#.'(K#A(4.&(*#7"(A"4&'(%-(4(K#-'"B($'+,-+.),!/0),)1!,!()0#!,2'.0)0'(,!(
traders have
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come into my
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because they
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market was
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going one way
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or another;
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however, they
A%@(+#-%A%#.(%.(NI%@I(A#(+7A(*#7"-'K/;(!K4@'(4(K%,%A(#"&'"(4(/'N(A%@-(4)#$'
failed to put a
#"()'K#N(AI'(,4"O'AB(&'+'.&%.5(#.(*#7"(+#-%A%#.B(-%A()4@O(4.&("'K4T;
position on.

? )"%@OK4*'"(-I#N-
MAKE THE SAME
# 22 TYPE OF TRADES OVER
AND OVER AGAIN –
7+( /#"( N#"O
'$'"*( &4*( #/( I%-
BE A BRICKLAYER.
N#"O%.5( K%/'( 4.&
'T'@7A'-( N%AI( AI'
-4,'( ,'AI#&#K#5*[
# 24 ALL TRADERS ARE
CREATED EQUAL IN
THE EYES OF THE
='( 4KK( -A4"A( #7A
AI'(&4*(AI'(-4,';
='(4KK(-A4"A(#7A(4A
)"%@O()*()"%@O()*()"%@O;( MARKET. 6'"#;( 2.@'( AI'( )'KK
"%.5-( 4.&( A"4&%.5( )'5%.-B
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lM(4.&(l89;(C(I4$'(.#A(@I4.5'&(,*(A"4&%.5(,'AI#&#K#5*(4.&('T'@7Q N%KK(&%@A4A'(NI'AI'"(#"(.#A(N'(N%KK(,4O'(,#.'*(#.(AI'(&4*;(C/(*#7
A%#.(-A"4A'5*(%.(89(*'4"-;(C(57'--(CR,(AI'()"%@OK4*'"; /#KK#N(AI'(8L(U7K'-B(*#7(-I#7K&(&#(N'KK;(C/(*#7(&#(.#AB(*#7(N%KK
&#(+##"K*;

DON’T OVER-ANALYZE. C( @4.RA( A'KK

# 23 DON’T PROCRASTINATE.
DON’T HESITATE. IF YOU
DO, YOU WILL LOSE.
*#7( I#N
,4.*( A%,'-
A"4&'"-( I4$' # 25 IT’S THE MARKET
ITSELF THAT WIELDS
PI'(,4"O'A(,#$'-
NI'"'$'"( %A
@#,'( %.A#( ,* THE ULTIMATE SCALE N4.A-( A#( 5#;( CA
#//%@'( A'""%)K* OF JUSTICE. &#'-( .#A( @4"'
&'+"'--'&( )'@47-'( AI'*( ^O.'N_( AI'( ,4"O'A( N4-( 5#%.5( #.'( N4*( #" 4)#7A( *#7( #"( ,';( CA
4.#AI'"o(I#N'$'"B(AI'*(/4%K'&(A#(+7A(4(+#-%A%#.(#.;(=I'.(C(4-O(AI', &#'-(.#A(+K4*(/4$#"%A'-;(CA(&#'-
NI*(AI'*(&%&(.#A(+7A(AI'(A"4&'(#.B(AI'%"("'-+#.-'-(4"'(4KN4*-(AI'(-4,'V .#A( &%-@"%,%.4A';( CA( &#'-( .#A( %.A'.A%#.4KK*( I4",( 4.*( #.'( %.&%$%&74K;
AI'*(&%&(.#A(N4.A(A#(@I4-'(AI'(,4"O'A;(PI'*(N'"'(N4%A%.5(A#()'(/%KK'& PI'(,4"O'A(%-(4KN4*-("%5IA;
4A(AI'(4)-#K7A'()'-A(+#--%)K'(+"%@'(X4.&(.'$'"(5#A(/%KK'&YB(#"(#.K*(AN#
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,4"O'A(%.&%@4A#"-(N'"' +7.%-I( *#7( %/( *#7( &#( .#A( +K4*( )*( AI'( U7K'-;( h'4".( A#( @#.&%A%#.
+"'-'.A( 4.&( AI'*( N'"' *#7"-'K/(A#(+K4*()*(AI'(8L(U7K'-(#/(P"4&%.5(J%-@%+K%.'(4.&(*#7(N%KK
A bricklayer shows up N4%A%.5(/#"(AI'(AI%"&; )'("'N4"&'&;
for work every day of
his working life and PI'( .'A( "'-7KA( #/( 4KK
executes with the AI%-( +"#@"4-A%.4A%#.
same methodology— 4.&( I'-%A4A%#.( %-( AI' 4'+5,637!.8$,0.,9:;,'&,!<'=37>,<?<?9?>,@@@?!7'=37)#3*A SFO
brick by brick by brick. A"4&'"( N4-( @#""'@A( %. 0(5?='-?,,:<'=37,2#'"0*!.,21$.0=37,3(*,!7!=)#'(0=,!/!=+A
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