Ray Dalio needs no introduction.
There’s no doubt we can learn a ton from such a legendary investor.
That’s why today I want to share with you 7 powerful lessons from his book ‘Principles’ which you can apply to your trading TODAY.
These are some of the principles Ray used himself to succeed in the stock market, and it’s interesting how I used some of these without even noticing!
Without further ado, let’s get started:
Work for yourself and don’t just do what others ask of you
Ray Dalio didn’t particularly love school growing up.
From a young age, Ray decided to work for himself, and he learned that he could get anything that he wanted by working for it.
And when he was 12 years old, he bought his first shares in the stock exchange.
See, Ray didn’t take the traditional, secure route. Instead he chose the uncertain, hard one.
I guess we can both agree it went well for him, right?
Working for yourself can be scary sometimes.
But if you put in the work and become good at your craft there’s no ceiling to what you can achieve.
Create independent opinions and use them to advance your goals
We talk about developing your own strategy at Hawkeye all the time.
Every trader is different, has different goals, different strengths and weaknesses…
There’s no cookie-cutter approach that can make every single person that uses it successful in the market.
One of the main things we do inside Hawkeye is help our students develop their own strategy.
Play to win
The financial markets are like a jungle.
It’s kill or be killed.
It’s no place to play around or test the waters.
You have to be in 100%… or you’ll soon be out.
That means doing your due diligence, researching, having a solid mindset, learning what’s working now, etc.
There’s a lot of things involved. That’s why you need to apply the next lesson…
Surround yourself with the smartest people you know and learn their way of thinking
When he was beginning in the world of investment, Ray had questions for everyone that he considered a good investor.
This could be anyone. For example, he asked his stockbroker, his barber and anyone else that he thought was good at investment.
By learning the processes of many people, he boosted his chances of being right in trades, and it contributed to his overall success.
Which is why the Hawkeye community is so powerful.
We help each other with research, we share new opportunities, and we learn together!
I personally do a live session every Wednesday where you can ask ANY questions you have.
Plus, you can interact with other members inside our exclusive Hawkeye group to learn what’s working for them or ask about one of your trades!
Invest in what you know and understand
No matter which type of appetite you have, Ray says that risk grows from not knowing what you are getting involved in.
If you make trades in a sector of industry that you know little to nothing about, that can be risky.
That’s why I always preach niching down to a sector you’re familiar with.
“Invest in things that you know and you will be successful.” – Ray Dalio
In my case that’s energy.
How about you?
If you need help finding your niche, you can look at your previous career, your interests, the news you typically follow…
Reflect on your past decisions to improve your future ones
One of the principles that Ray Dalio depends upon extensively is the process of decision-making and the activity of analyzing results.
Which sounds boring and vague, but I’m going to teach you exactly what Ray means and how I personally do this.
From his days as a boy, he learned that failure was the result of something that he or others around him were doing wrong.
By analyzing the reason for failure, Ray learned how to be effective at a higher rate than his peers.
Struggling with his mistakes, problems and weaknesses made Ray grow into a strong investor.
The lesson here is to not shy away or be embarrassed of mistakes. Simply learn from them and strive never to repeat them.
How do you learn from them?
Here’s what I do.
I go to my trade history and analyze my latest failed trades.
I open the chart and find where I opened a position, what my indicators were telling me, how the trend developed, where I should have closed my position, etc.
And I recommend you do this with every losing trade. This one comes back to the ‘Play to win’ lesson.
Yeah, it sounds cute and all, but the reality is if you don’t put in the work to master the craft you’re not really playing to win.
This is in my opinion the single best thing you can do to become a better trader (besides becoming a Hawkeye Trader).
Become aware of overconfidence and reduce your risk to the lowest level possible
Overconfidence is much worse than lack of confidence.
When you lack confidence you’re cautious and don’t take big risks.
But overconfidence is what leads to blown accounts!
The most basic lesson in trading 101 is to reduce risk as much as possible.
Yet we forget about this all the time by focusing on the upside.
It’s understandable though — the goal is to close big wins, right?
But that often involves higher risk, and it’s our duty as traders to protect our trading capital.
Which is one of the main things we teach in Hawkeye Mastery Academy!