Stage One: The Mystification Stage
Stage Two: The Hot Pot Stage
Stage Three: The Cynical Skepticism Stage
Stage Four: The Squiggle Trader Stage
Stage Five: The Inwardly-Bound Stage
Stage Six: Mastery (Which stage are you currently at?)
Archives of “Education” category
rssThe concentration of the indices is not new.
Learn From Every Trade
I know many traders who can’t figure out why they don’t make the returns they know they can have.
I’ve tried to explain to them that they need to track what they are doing to identify mistakes.
Without a trading journal where you track your trades, it’s hard to remember what made you act in a certain way at the time.
The best traders in the world track their trades. That enables them to learn from every trade and thereby advance their skills as traders.
And when you advance your skills as a trader, you make more money.
Tracking your trading does not have to be complicated.
For example:
Take a screenshot of your chart, use an Excel document or pen and paper to write down the security, date, price, stop price, setup, and thoughts behind the trade.
When you close your position, you write down the date and price if you followed your rules, gain/loss, and thoughts about the trade.
Simple as that!
“A peak performance trader is totally committed to being the best and doing whatever it takes to be the best. He feels totally responsible for whatever happens and thus can learn from mistakes. These people typically have a working business plan for trading because they treat trading as a business.” – Van K. Tharp
Some of the most successful traders and best trader in the world to learn from are:
- Jesse Livermore is known for both colossal gains and losses. He made $million in 1929, and by 1934 he had lost all of it (an example that confirms the huge risk involved in stock trading).
- George Soros is one of history’s most successful stock and forex traders. He gained the nickname “the man who broke the bank of England” when he made $1 billion profit from selling $10 billion worth of pounds. He is the chairman of Soros Fund Management.
- Richard Dennis is a successful commodity trader based in Chicago. He made an estimated $200 million over a period of ten years from market speculating.
- Paul Tudor Jones became famous after the market crash of 1987 to make a whopping $100 million from shorting stocks. He is the founder of Tudor Investment Corporation.
- William Delbert Gann is known for developing technical indicators like Gann Angles and the Square of 9. He was a trader who used market forecasting techniques based on astrology, geometry, and mathematics.
- Bill Lipschutz turned $12000 investment in the stock market to $25000 in a few months but lost all of it. He then moved to forex trading, where he has made over $300 million.
- John R. Taylor Jr started as a political analyst for a chemical bank before becoming their forex analyst. He is the owner of FX Concepts, which is a currency managing firm.
- Stanley Druckenmiller is a successful trader who started as an oil analyst for the Pittsburgh National Bank. He was a part of a deal while working at George Soros that raked in $1 billion.
- Andrew Krieger is one of the best trader in the world. He sold kiwi, a New Zealand currency, a trade valued more than the total currency supply. He got revenue of $300 million from the trade.
- Michael Marcus is one of the best and most successful forex traders in the world. Legend Ed Seykota trained him. During the presidency of Ronald Reagan, Marcus held positions of almost $300 million in German marks.
Steve Jobs’ resignation letter in 1985:
“I think there are only two main sources of profit in the markets: the compensation of liquidity risk and the benefits of information.
100 Hard Realities for Traders — #AnirudhSethi
- “The goal of a successful trader is to make the best trades. Money is secondary.”
Meaning: A quote to remind you to focus on getting the trade to work first! Money is the reward, an outcome of a successful trade. Thinking solely about the reward will cloud your judgment.
- “Do more of what works and less of what doesn’t.”
Meaning: A great quote to remind yourself to keep track of what is working in your trading strategy and what isn’t. If something isn’t working for you, cut it. Remember to keep a trading journal!
- “Never, ever argue with your trading system”
Meaning: It will never get you anywhere! And let’s face it, it’s probably not the systems’ fault. If it’s really doing you no good, change it
- “In this business, if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.”
Meaning: The best traders are never right all the time, they make losses too. Focus on getting more trades right than wrong and you’ll be considered successful.
- “All the math you need in the stock market you get in the fourth grade.”
Meaning: A trading quote to remind you to keep your trading strategy simple. The more complex your trading strategy is, the more things can go wrong.
- “Novice Traders trade 5 to 10 times too big. They are taking 5 to 10 percent risk, on a trade they should be taking 1 to 2 percent risk on.”
Meaning: As a rule, when you first start trading, never risk more than one or two percent of your trading account on a trade. For example, if you have $3,000 in your account, never trade more than $30.
- “In investing, what is comfortable is rarely profitable.”
Meaning: You need to take risks in order to make a profit. If there’s no risk in the trades you’re making, you cannot expect to really make a living as a trader.
- “There is no single market secret to discover, no single correct way to trade the markets. Those seeking the one true answer to the markets haven’t even gotten as far as asking the right question, let alone getting the right answer.”
Meaning: An inspirational trading quote to remind you to stop looking for shortcuts! In reality, no one really knows how to crack the market and be successful all the time.
- “If most traders would learn to sit on their hands 50 percent of the time, they would make a lot more money.”
Meaning: The best traders know that patience is the key to making successful trades. Don’t trade too often and avoid overtrading.
- “In trading/investing, it’s not about how much you make but rather how much you don’t lose.” – Bernard Baruch
Meaning: Before you make a trade, you need to understand your risk-reward ratio. Proper risk management is more important than making money.
- “Every trader has strengths and weakness. Some are good holders of winners but may hold their losers a little too long. Others may cut their winners a little short but are quick to take their losses. As long as you stick to your own style, you get the good and bad in your own approach.”
Meaning: What works for you as a trader may not work for others. Every trader has their own trading style.
- “Time is your friend; impulse is your enemy.”
Meaning: Another motivational trading quote to remind you to be patient. Take your time and don’t give in to your impulses.
- “There is a time to go long, a time to go short and a time to go fishing.”
Meaning: Another inspirational trading quote about trading less rather than more. Having a break from trading can often make you a better trader.
- “Do not anticipate and move without market confirmation – being a little late in your trade is your insurance that you are right or wrong.”
Meaning: A great tip for traders who use analysis. You need to wait and confirm that a trend is emerging before making a trade. That way you can be sure your trading strategy will work.
- “The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages.”
Meaning: The perfect trading quote for someone who forgets that trading is not like a regular nine to five job. You won’t make money every day and, if you’re successful, you won’t need to.
- “Money is made by sitting, not trading.”
Meaning: Sit and wait for the right opportunity. Awesome trading quote about patience.
- “I learned early that there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again. I’ve never forgotten that.”
Meaning: It’s a well-known fact that markets repeat themselves! If a situation appeared before, it will certainly reappear.
- “Why do you think unsuccessful traders are obsessed with market analysis? They crave the sense of certainty that analysis appears to give them. Although few would admit it, the truth is that the typical trader wants to be right on every single trade. He is desperately trying to create certainty where it just doesn’t exist.”
Meaning: It doesn’t matter how good your market analysis is, it can still be wrong. You need to remember that it is not an exact science.
- “If you can learn to create a state of mind that is not affected by the market’s behavior, the struggle will cease to exist.”
Meaning: The perfect trading quote for highlighting the importance of being a detached trader. Don’t give in to the pressure the market puts on you.
- “Dangers of watching every tick are twofold: overtrading and increased chances of prematurely liquidating good positions.”
Meaning: Stop watching the market so closely. You’ll only end up trading too much, which is risky and/or close good positions too early. Either way, you’ll lose money.
- “We want to perceive ourselves as winners, but successful traders are always focusing on their losses.”
Meaning: Successful traders think more about protecting what they already have. That is always more important than making more money.
- “Throughout my financial career, I have continually witnessed examples of other people that I have known being ruined by a failure to respect risk. If you don’t take a hard look at risk, it will take you.” – Larry Hite
Meaning: A superb trading quote about understanding risk. If you don’t respect risk, you will fail as a trader.
- “Frankly, I don’t see markets; I see risks, rewards, and money.”
Meaning: Another one for keeping things simple! Remove everything else from your mind and focus on the key elements of trading.
- “I don’t think you can get to be a really good investor over a broad range without doing a massive amount of reading. I don’t think any one book will do it for you.”
Meaning: Good traders never stop learning. Even when they become pros at trading, they are still learning.
- “In the short run, the market is a voting machine, but in the long run it is a weighing machine.” Meaning: The market acts like a popularity contest in the short-term, but in the long-term, we see the real value behind a market instrument.
- “It’s not what we do once in a while that shapes our lives. It’s what we do consistently.”
Meaning: Smart words for trading and for life! In order to be considered a successful trader, you need to focus on making consistent trades over time.
- “Bulls make money, bears make money, and pigs get slaughtered.”
Meaning: You can make money when the market is going up and down, but you won’t make money if you’re greedy.
- “Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”
Meaning: Trading is not the same as gambling. It’s not about having fun, it’s about working out the right time to make your move.
- “The fundamental law of investing is the uncertainty of the future.” Meaning: You can never be sure of what will happen. It doesn’t matter how good your research is, you will never be completely right.
- “You can be free. You can live and work anywhere in the world. You can be independent from routine and not answer to anybody.”
Meaning: Perhaps one of the most inspirational trading quotes to remind you how liberating it is to be a trader!
- “You have to identify your weaknesses and work to change. Keep a trading diary – write down your reasons for entering and exiting every trade. Look for repetitive patterns of success and failure.”
Meaning: This motivational trading quote is may be one of the most actionable. Take heed and find out what works for you.
- “Sheer will and determination is no substitute for something that actually works.”
Meaning: Motivation is not enough to become a successful trader. You need knowledge, specifically knowledge of what works for you.
- “Short-term volatility is greatest at turning points and diminishes as a trend becomes established.”
Meaning: Great words from a trading legend. Remember this quote when putting together a trading strategy that utilizes trends.
- “Markets are constantly in a state of uncertainty and flux, and money is made by discounting the obvious and betting on the unexpected.”
Meaning: Although we can never be 100% sure what direction the markets will move, some things can be estimated and some things can’t.
- “It’s not whether you’re right or wrong that’s important, it’s how much money you make when you’re right and how much you lose when you’re wrong.”
Meaning: Another excellent quote for risk-reward ratios. And another example of a top trader keeping losses in mind at all times.
- “In trading, the impossible happens about twice a year.”
Meaning: A helpful reminder that every so often the unbelievable will happen. Keep your eyes peeled for those moments.
- “The core problem, however, is the need to fit markets into a style of trading rather than finding ways to trade that fit with market behavior.”
Meaning: You can’t fit the market around your strategy, you can only fit your strategy around the market.
- “Never invest in any idea you can’t illustrate with a crayon.”
Meaning: A hilarious motivational quote that reminds us to keep trading simple. If something is too complicated, it means there are more chances of it going wrong.
- “I get real, real concerned when I see trading strategies with too many rules (you should too).”
Meaning: Just like the above, this is a great trading quote about keeping trading strategies simple. The fewer the rules there are the better.
- “I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime.”
Meaning: Patience is one of the most valued skills in trading. You have to remember to only strike when the time is right!
- “I believe in analysis and not forecasting.”
Meaning: A good quote for keeping trading scientific and in the moment. Try to keep forecasting to a minimum, if possible.
- “Trading doesn’t just reveal your character, it also builds it if you stay in the game long enough
Meaning: Attaining the skills to become a great trader is a lifelong journey. To be successful requires you to make changes in your life.
- “Focus, patience, wise discernment, non-attachment – the skills you acquire in meditation and the skills you need to thrive in trading are one and the same.”
Meaning: Four essential skills any successful trader needs. They won’t just help you trade better, they can also help you lead a better life.
- “Confidence is not ‘I will profit on this trade.’ Confidence is ‘I will be fine if I don’t profit from this trade.”
Meaning: Excellent advice on trader psychology. You need to have the right approach to winning and losing trades.
- “You will never find fulfilment trading the markets if you don’t learn to appreciate and be satisfied with what you already have.”
Meaning: A great trading quote to remind you to appreciate and protect what you already have. Understanding risk means appreciating what you already have.
- “Beware of trading quotes.”
Meaning: A hilarious quote to remind you that inspirational trading quotes are not enough to be a successful trader!
- “Learn to take losses. The most important thing in making money is not letting your losses get out of hand.”
Meaning: In order to avoid losses, you must first understand and respect them. But more importantly, you need to mentally accept them.
- “A lot of people get so enmeshed in the markets that they lose their perspective. Working longer does not necessarily equate with working smarter. In fact, sometimes is the other way around.”
Meaning: Smart traders trade less not more! Don’t let yourself get caught up in the market!
- “When I became a winner, I said, ‘I figured it out, but if I’m wrong, I’m getting the hell out, because I want to save my money and go on to the next trade.”
Meaning: Another important reminder to look after what you already have.
- “I have learned through the years that after a good run of profits in the markets, it’s very important to take a few days off as a reward. The natural tendency is to keep pushing until the streak ends. But experience has taught me that a rest in the middle of the streak can often extend it.”
Meaning: Similar to the above, this inspirational trading quote is a reminder that you need to take a break from the markets every so often to avoid overtrading and losing what you have. Reward yourself! (more…)
From ‘The Sophisticated Investor’ – Burton Crane 1959
A few strategies that Roppel follows that the ones before him also implemented. From ‘How Legendary Traders Made Millions’
PRICE IS NOT THE ANSWER.
It’s all quite deceptive, really – I mean, they are called the markets, after all, and things are bought and sold there and not much else happens at all. So how can the markets not be about price, when price is all there is?
Here is my solution. The stock market is not the place for bargain hunting. It’s not a shop that has discounts. It’s not about value at all – it’s about price movement. It’s all in the moves. The trick is to discover just how you want the price action to look before you take the plunge and risk your cash.
This is by no means an easy thing to do. It can be extremely hard to buy a share that has just risen 30% from its lows, because we automatically tell ourselves that we missed a bargain. However, it’s vitally important to hear what that kind of price action is telling us. To me, that share is hollering that something very cool is going on. People are buying it – in fact way more people are buying it than selling it. And if there are more buyers than sellers, it’s gonna go up.
Now that is simple.