Trading quotes


And the great sea with its friends and its enemies. And bed, he thought. Bed is my friend. Just bed, he thought. Bed will be a great thing. It is easy when you are beaten, he thought. I never knew how easy it was. And what beat you, he thought. ‘Nothing’, he said aloud. ‘I went out too far.’

– Hemingway, The Old Man and the Sea

‘At that point I ought to have gone away, but a strange sensation rose up in me, a sort of defiance of fate, a desire to challenge it, to put out my tongue at it. I laid down the largest stake allowed – four thousand gulden – and lost it. Then, getting hot, I pulled out all I had left, staked it on the same number, and lost again, after which I walked away from the table as though I were stunned. I could not even grasp what had happened to me.’

– The Gambler, by Fyodor Dostoevsky

If you must play, decide upon three things at the start: the rules of the game, the stakes, and the quitting time.

– Chinese Proverb

Luck never gives; it only lends.

– Swedish Proverb

Depend on the rabbit’s foot if you will, but remember it didn’t work for the rabbit.

– R.E. Shay

Are you a Trader or Gambler?

Why do you trade ?

Let me guess…

Because you want to make a crapload of money and be able to buy anything you wish?

While this is a perfectly valid reason, it will most likely lead to excessive greed and ultimately lead to your trading account’s destruction.

You might as well take your money to Vegas instead, and gamble it away.

Once your money is all gone, at least it was entertaining.

Greed is the worst motivation for trading. The market will always punish greed and will always reward moderation.

Never try to make all of your money on one trade.

Never try to make all of your money on one trade.

If you do, you are not trading, you are gambling!

There is a fine line between traders and gamblers. When there is real money on the line, there are always those who take blind chances.

If you want to be a successful, do NOT think like a gambler, do NOT take blind chances and do NOT solely rely on luck.

Luck comes and goes just like the gambler.

It’s the trader who remains.

Discipline-Risk Management-Passion

DISCIPLINE: The trader must have the ability to control themselves and follow a plan. Discipline is a required skill in trading without it there is no edge, you are either a gambler or simply trading off fear and greed. You will not be successful, instead you will be gamed by those in control of their emotions.
RISK MANAGEMENT: Risk management must be a top skill for a trader to even survive in the markets. You must structure your risk per trade to be no more than risking 1% or 2% of your trading capital. You have to be able to survive 10 losses in a row. These strings of losses come around more often than a new trader would suspect. If you lose just 5% of your trading capital in each of ten trades you will be down almost 50% and need a 100% return just to get back to even. At this point you are ruined.
PASSION: A trader must love to trade, without a passion for the markets and trading the new trader will not survive the learning process because anyone with common sense would believe that it was not worth the struggle. Passion will be needed to bring a trader through the learning curve and later the losing streak.

Are You a Gambler or a Trader?

Here is a quick checklist to see if you are a bad gambler or a good trader:

  • Gamblers have a disadvantage to the house, good traders have a  system that gives them an advantage over other traders.
  • Gamblers always leave the casino broke no matter how much money they are up at any given time, good traders make money consistently.
  • Gamblers risk money randomly, good traders risk preset amounts of money on each trade.
  • Gamblers do not understand the odds against them, good traders understand the risk/reward ratio in every trade.
  • Gamblers enter a casino with no understanding of their risk of ruin, good traders manage their risk of ruin so it is close to zero.
  • Gamblers use emotions to make decisions, good traders use a trading plan for each decision.
  • Gamblers have ego problems when they are winning, good traders are humble while winning.
  • Gamblers go all in to win big, good traders trade just big enough to make a meaningful profit.

Why You May Never Make Money as a Trader

While there are a lot of traders out there, many of them don’t make any money. Well, it’s time for a wake-up call folks. Here are six reasons why you do not — and may not ever — make money as a trader:
You don’t put in the proper amount of effort. You don’t put in the full-time commitment it requires to be profitable in trading because you treat it like a hobby. Trading is not a part-time job. It’s serious business.

  1. Failure to be disciplined and consistent with your process. There’s no excuse for this. It’s all up to you.
  2. Trading like a gambler instead of a trader. You’re taking irresponsible risks rather than thinking in terms of probabilities and trading when you have an edge.
  3. Actually putting on trades without a solid game plan. What are you thinking? You must know your game plan and execute it.
  4. You over think things. Trading is a simple game — up, down, sideways. Keep it simple and make money.
  5. Not trusting yourself to do what you know you need to do. You spend too much time listening to other people. Trust yourself and execute what you know.

The good news: every one of these things is entirely in your control. All you have to do is choose to make things happen.


The Difference Between a Speculator and a Gambler

A speculator strives to be professional, honorable, intellectual, serious, analytical, calm, selective and focused.
Whereas the gambler is corrupt, distracted, moody, impulsive, excitable, desperate and superstitious.
It’s not the market that defines whether a participant is a Gambler or a Speculator, it’s his behavior.

Mix It Up A Little

Does boredom cause you to do silly things? If so, you’re certainly not alone.

More and more I see traders make simple mistakes primarily because they are bored with what they are doing NOT because they don’t know what they’re doing.

Contrary to popular opinion, traders and investors often do get bored. I know I certainly have. After all, if you’re doing it correctly, good trading and investing should be both boring and routine. If that’s not the case for you, it probably is because you’re either trading far too aggressively (i.e. the gambler) and/or you have no risk management skills whatsoever.

In my experience, most humans and including those of us who are very disciplined and focused, will from time to time seriously crave to change things up a little. No one, including me, likes to do exactly what they need and should do every day. Most of you are no different than me. The problem is that when we both get bored, very bad things tend to happen if we don’t first realize that our trading and investing is being negatively impacted by boredom and do something about it.

For example, in my experience traders tend to either disconnect from the market entirely (which can be dangerous with positions open or lost opportunity) or they do the exact opposite by increasing their overall risk to “make it more interesting.” Likewise, investors tend to become far more active (i.e. they turn into traders and churn positions) just to do something to keep themselves preoccupied or they buy and sell stocks that normally they wouldn’t even consider. In either case, neither one tends to work very well.

When you start to see the signs that you are becoming bored and have the urge to do something “different,” I recommend mixing things up a little. For example, when I become bored with my trading and daily routine I often do the following which seems to help:

  • Head to the gym (intense and exhausting exercise is the best cure for boredom I know)

  • Mix up the daily routine (I like to flip my day around and do things I usually do at the end of the day first)

  • Try to learn something new (I often try to study a different sector/different market now, but in previous years I would enjoy playing around with a new indicator or two)

  • Read about something you know nothing about (if you do this, you’ll be amazed by how much it will stimulate your brain)

  • Take some time off and do something else (while I always have a long “honey-do” list to keep me busy, that’s also why there are golf courses!)

Now, for those of you who make a living trading and who feel they cannot leave the game for an hour, much less an entire trading day, I have some suggestions for you as well: (more…)

Trading vs gambling

The difference between a trader and a gambler is frequency.  A gambler does it once.  A trader is committed to take the natural fluctuations in their bottom line.  A gambler gives up control and takes little responsibility for the outcome.  A trader sees the outcome as a learning experience.  A chance to take that knowledge and let it pay over time.  A gambler sees a success as a pay day.  A trader see it is an opportunity.  A gambler focuses on luck, a trader focus on repeatable actions.  A traders can tell the difference between an aberration, for a gambler there is no distinction.

Trading for a living

You’ve got to bring your A game to the table each and every day. There is no sitting in a cubicle playing solitaire, visiting with facebook friends, talking with others in the break room about fantasy football, etc. that is going to get the job done for you. Your efforts, whatever they may be, will be directly related to your bottom line returns!

  • Past success means absolutely nothing. You are only as good as your next trade, your next week, your next quarter, etc. In addition, what you do next always has the potential to unravel whatever success you’ve acquired previously. Few careers offer you the potential for self-destruction so quickly the way trading for a living provides.

  • The pressure to perform will create unbelievable amounts of negative stress and energy you’ll have to deal with daily. Most people don’t have to worry or fear that being wrong will cost them their paycheck. After all, just look at economists, bankers, and politicians!

  • There will be little to no respect or understanding for what you do for a living. People will assume you’re a “day trading gambler.” Or, in my view, which is even worse, many idiots will express the view that they could also “trade for a living” if they decided to. This is true even in by those who’ve shown no consistent success in the markets on a “part-time basis.”

  • Working in isolation you’ll often miss close human interaction and the lack of a competitive “team” like atmosphere. Also, building and holding outside friendships, especially for men later on in life, are often very difficult for those who don’t meet a lot of people through their jobs.

  • Sitting 12 hours a day every day at the computer will wreak havoc on your overall health and fitness. Many traders are overweight, have back issues, eyesight problems, etc.

  • Like many highly skilled professions it requires constant education & learning. In many, but not all careers, once you’ve acquired a certain amount of skills and knowledge, little more is expected of you. In trading, you’ve got to always be in learning mode. In addition, what you think you know right now and what is working for you, will not someday in the future. That’s the way of constant evolutionary state of the marketplace.

  • You’ve got to be a jack of all trades. I’ve often said that if trading was the only thing I had to do, my life would be a whole lot easier. Instead, independent traders must spend time serving as their very own tax accountant and tech support guru. In my view, there’s nothing worse than a hardware or software issue that takes you away from concentrating on the markets. (more…)

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