Trading can be difficult, confusing and outright frustrating at times. It’s at times like these when inspiration from some of the trading greats can be most useful, how else better to appreciate what they’ve achieved than reading a few quotes from the leaders themselves?
1. Ed Seykota – Trading with Fundamentals (News Trading)
“Fundamentals that you read about are typically useless as the market has already discounted the price, and I call them “funny-mentals”. I am primarily a trend trader with touches of hunches based on about twenty years of experience. In order of importance to me are: (1) the long-term trend, (2) the current chart pattern, and (3) picking a good spot to buy or sell. Those are the three primary components of my trading. Way down in a very distant fourth place are my fundamental ideas and, quite likely, on balance, they have cost me money.” – Ed Seykota
Markets move based on speculation and expectations of future events, and so making trade deals based on what’s been publicly reported is futile as the actual news has already been acted upon by the big traders in the market. That’s why spending time researching economic reports and the subsequent impact on future markers that may or may not happen is not worth it. It’s better to stick to pure price action trading by reading the charts and making decisions based on your own interpretations.
2. Warren Buffet – Self-discipline and Risk Management
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” – Warren Buffett
Being consistent in the market is essential to becoming a successful trader which is why having a strategy in place and sticking to this can serve you well. However, it only takes one trade when you’ve over-extended and the market decides to go against you to wipe out all the money and reputation you’ve earned. Therefore, maintaining discipline and establishing a good risk management system is key to staying on top in the market.
3. Mary Schwartz – Learning to take Loses Properly
“Learn to take losses. The most important thing in making money is not letting your losses get out of hand.” – Marty Schwartz
Learning how to take a loss is a skill that is often overlooked by many traders. But this is what separates the good traders from the bad, as if you don’t learn how to deal with them they can cause further damage by encouraging traders to take more risks to make up for their loses. Traders can’t control how many loses they will experience but they can certain decide how big they’ll be and how to deal with them.
4. Paul Tudor Jones – Not Getting Over-Confident after Winners
“Don’t be a hero. Don’t have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead. My biggest hits have always come after I have had a great period and I started to think that I knew something.” – Paul Tudor Jones
Once you start to see consistent returns it can be easy to think everything you touch will turn out to be a success. This is a deadly mistake and a sure-fire way to lose in the market. Maintaining humble foundations prevents your ego from taking over, which can lead to irrational decision making, leaving yourself open for a sudden market change to negatively impact on your trading portfolio.
5. George Soros – Being a Contrarian in the Market
“Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.” – George Soros
Changing your perspective of how you view the market is criminally underrated. Looking at it through the eyes of an amateur means betting on the obvious looking breakout, but a professional is able to see these as false breakouts and will wait for it to materialise rather than jumping in with the rest of the “herd” which could lead to huge loses.
Do you feel inspired by these quotes to kick-start your trading career? Check out our New 2 Trading™ course which gives you the perfect base to start.