In life, one of the best ways to master any skill or succeed in a profession is to learn from those who have already succeeded in that profession. This also applies in trading. To become a successful trader, you need to learn from the experiences of those who have mastered the game.
Interestingly, those legendary traders have on many occasions left a trail of clues that can help us understand how things work in the market. It is left for us to understand the lessons in their statement and apply them in the appropriate aspects of our trading.
To make things easier for you, we will highlight some of the most invaluable trading quotes made by veterans in the game and explain how you can apply the lesson in your trading. While I cannot promise you that applying the lessons can guarantee your success in trading, I know that it will put you in a much better position to succeed.
In this post, we’ll discuss some of the most popular and insightful trading quotes made by these 50 legendary traders who have amassed so much wealth from trading:
Table of contents:
Trading quotes #1 — Paul Tudor Jones
“Where you want to be is always in control, never wishing, always trading, and always, first and foremost protecting your butt.”
“If you have a losing position that is making you uncomfortable, the solution is very simple: Get out…”
“Don’t focus on making money; focus on protecting what you have.”
“The most important rule of trading is to play great defense, not great offense.”
The legendary trader, Paul Tudor Jones, made these quotes on separate occasions, but apparently, he’s trying to pass the same message: protecting your trading capital is key to achieving any success in trading.
You may think that trading is all about making money. Yes, the ultimate goal is to make money, but you can’t make a dime if you lose your capital. So, the primary goal is to protect your capital.
And how do you do that? Always be in control: trade a position size that won’t affect your emotions. When in a losing position that’s making you uncomfortable, get out — ideally, you should use a stop-loss order that would get you out before it gets uncomfortable.
Trading quotes #2 — Ray Dalio
“What is most important isn’t knowing the future — it is knowing how to react appropriately to the information available at each point in time.”
“The biggest mistake investors make is to believe that what happened in the recent past is likely to persist. They assume that something that was a good investment in the recent past is still a good investment.”
Many traders think that it’s only when they know what would happen in the future that they can make money. So, they make many assumptions about the future, including the belief that what is happening at the moment would persist forever — the trend would continue or the range market would persist. They trade as if the present condition is the default condition of the market.
Ray Dalio reminds us of one fundamental truth about trading: we can’t predict the future with certainty, and interestingly, we don’t need to. What matters is your ability to use the information available at every moment to make the most appropriate decision.
Trader quotes #3 — Bill Lipschutz
“If most traders would learn to sit on their hands 50 percent of the time, they would make a lot more money. I don’t think you can consistently be a winning trader if you’re banking on being right more than 50 percent of the time. You have to figure out how to make money being right only 20 to 30 percent of the time.”
There are two ways to look at what Bill Lipschutz is saying here. The first one is that depending on the timeframe you are trading, reliable trade setups that are worth the risk don’t form that frequently. If you are a swing trader, for example, you may only get two or three good setups per week, depending on the number of markets you are monitoring. So, for the most part, you won’t be making any trade — until a good setup appears.
Another way to look at the quote is that you don’t need to be right up to 50% of the time to make money if you employ a good reward/risk ratio. If you have a strategy that offers you a 4:1 reward/risk ratio, you can be profitable even if you win only 30% of the time.
Forex trading quotes #4 — Brett Steenbarger
“We become what we consistently do.” “Routine is necessary for efficiency; breaking routine is necessary for adaptation.”
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”
Truly, to master anything in life, you have to do that thing consistently over a long time. At a time, it becomes a routine, and that consistency helps you to become efficient in it. However, in trading, while the market conditions change from time to time, so to be good at trading, you should learn when to break the routine so you can adapt to the new condition. This is simply what the renowned trading psychologist, is trying to say.
“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.”
Brett Steenbarger identified the problem of not adapting to the changing market conditions as trying to fit the markets into our trading styles, instead of trading in a way that fits the market condition at that moment. For example, some crypto traders, in the latter part of the second quarter of 2021, continued buying dips even when it’s obvious that cryptocurrencies have entered a bear market.
Trading quotes #5 — Bruce Kovner
“I know where I’m getting out before I get in. Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. The position size on a trade is determined by the stop, and the stop is determined on a technical basis.”
First, it helps to have an exit order in place so you can get out without your emotions getting the better of you. It is difficult to make a logical decision in the middle of trade; emotions would always come in.
However, Mr. Bruce Kovner is saying something interesting here regarding stop loss and position size. Many traders approach this the other way around: they choose a position size to trade and then calculate the size of stop loss that would allow them to risk a particular amount of dollars they plan to commit in the trade.
But that is wrong, as it forces you to use far more leverage than is good for your account size and trading experience. Mr. Bruce is telling you to place your stops at a point that, if reached, will reasonably indicate that the trade is wrong — not at a point determined primarily by the maximum dollar amount you are willing to lose.
Trade quotes #6 — Van K. Tharp
“When you understand what’s involved in winning, as do professional gamblers, you’ll tend to bet more during a winning streak and less during a losing streak. However, the average person does exactly the opposite: he or she bets more after a series of losses and less after a series of wins.”
Of course, each trade is different, and wins and losses are randomly distributed. But like any randomly distributed variable, wins and losses can come in streaks. In a winning streak, you may be more likely to win the next trade, while in a losing streak, you may be more likely to lose the next trade.
Van K. Tharp understands this strategy, which is also used by professional gamblers. They bet more in a winning streak since there’s a tendency to win the next bet/trade in that state. On the other hand, during a losing streak, they reduce their bet size because there’s a tendency to lose the next trade. This approach can help you maximize the periods when you win and reduce risk during the losing period.
Trading quotes #7 — Rob Hanna
“No one can upset you unless you give them permission.”
You may be wondering how this simple statement relates to trading the financial markets. But then, the statement becomes clear when you realize that Rob Hanna is a renowned quant trader. In quant trading, mathematical models are used to analyze the market for opportunities and are implemented with the use of computer algorithms and artificial intelligence. So, there’s no room for human emotions in making trading decisions — quant traders don’t give the market permission to upset them.
But this is not just about quant trading or even the general automated trading ecosystem. If you are a discretionary trader, you can also apply this lesson in your trading. The primary way to do this is by having a trading plan that tells you what to do in any market situation. You can also write out the criteria of your trading strategy so you know exactly when to enter and exit a trade without second-guessing the market.
Trading quotes #8 — Ed Seykota
“The markets are the same now as they were five or ten years ago because they keep changing-just as they did then.”
It seems as if Ed Seykota and his quote contradict what we know about the market, but it is basically the truth. The market is still the same and behaves the same — it trends when it wants to and moves sideways when it wants to. If you know that the market is always there and behaving the same way, generating trading setups, you won’t have to chase after a missed trade or make other trading mistakes. Your primary goal would be to protect your capital so you can take the next setup that appears.
“Win or lose, everybody gets what they want from the market. Some people seem to like to lose, so they win by losing money.”
Truly, the market gives you what you deserve. If you risk too much, you lose a lot. But if you trade carefully and minimize your risks, you will be able to play enough hands for your edge to manifest.
Trading quotes #9 — Jack Schwager
“There are a million ways to make money in the markets. The irony is that they are all very difficult to find.”
Jack Schwager states the obvious here: there are arguably as many different trading strategies as there are many traders in the market. And for strategies with an edge in the market, when executed properly over a large number of trades, they will make money. The problem, as he pointed out in the second sentence, is taking time to create a trading strategy with an edge and being disciplined enough to implement it correctly. This brings us to another quote from him:
“Being wrong is acceptable, but staying wrong is totally unacceptable.”
Here, he is talking about being disciplined while trading. It’s normal to make a wrong trading decision. But once you notice that your decision is wrong, you correct it immediately instead of holding on to it.
Trading quotes #10 — Jesse Livermore
“To anticipate the market is to gamble. To be patient and act only when the market gives the signal is to speculate.”
Jesse’s message here is simple: in trading, you don’t try to predict what the market might do in the future; you simply trade the signals you see at the moment. If you are not seeing any signal, you wait until the market shows you one. He emphasizes patients again with this other quote:
“It was never my thinking that made the big money for me; it was my sitting.”
Truly, it is that period of waiting that the money is made. First, sitting it out and waiting for a profitable trade to ride its course till the end of the trend can determine how much you make from a trade. But more importantly, waiting for the right setup to appear saves you from several potentially losing trades.
“Instead of hoping, he must fear; instead of fear, he must hope. He must fear that his loss must develop into a much bigger loss and hope that his profit may become a big profit.”
Here, Jesse Livermore describes the type of emotions a trader must have in different situations. If a trade is going against you, especially if it has crossed the level you marked for your stop loss (hard stop is better), you should be afraid that the loss can get bigger, instead of hoping that the price might turn and go in your favor. On the other hand, when you are in a winning trade, instead of fearing that the trade may turn against you, you should hope that the profit becomes bigger.
Trading quotes #11 — Jim Rogers
“One of the best rules anybody can learn about investing is to do nothing, absolutely nothing unless there is something to do… 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 wait for a situation that is like the proverbial ‘Shooting fish in a barrel’…”
The truth is that many traders feel that they always have to be doing something in the market. They would make a big play that turned out huge profits and would say, “Boy, I’m killing it; I just tripled my money.” Then, they hop in the market again to do something else with that money. They just can’t sit there and wait for another signal to developing before going back into the market. Jim Rogers says that this overtrading often leads to a disaster.
Trader quotes #12 — Jim Simons
“Patterns of price movement are not random. However, they’re close enough to random so that getting some excess, some edge out of it, is not easy and not so obvious — thank God. God probably doesn’t care. Thank whoever.”
Often regarded as ‘the man who solved the market’, Jim Simons launched the quant revolution, using mathematical models to analyze and trade the markets. In this quote, he points out that in the apparent randomness of the price action, there are patterns that can be exploited to gain an edge in the market.
“We search through historical data looking for anomalous patterns that we would not expect to occur at random.”
To find a pattern that gives you an edge in the market, you need to search through the historical price action. It’s there you can find what has been working that can still work in the market. He emphasizes this in his other quote:
“Past performance is the best predictor of success.”
Truly, while past performance may not be indicative of future performance, it is the best predictor of success there is. So, it makes no sense to use a strategy without first backtesting it to know how well it performed in the past.
Here you can read more about Jim Simons Medallion Fund.
Trade quotes #13 — Larry Connors
“I get real, real concerned when I see trading strategies with too many rules (you should too).”
Of course, there are obvious reasons for Larry Connors‘s concerns. When there are too many rules, the trader can easily get confused and start trading erratically, making a lot of mistakes, such as jumping the guns (placing a trade when the setup has not been completed) and missing trading opportunities.
A trading strategy should be as simple as possible, with a few rules that are easy to execute. That way, you know what you are looking for and what to do at any point. As you know, it is not easy to make decisions in the heat of the moment when trading. So, the criteria for every action — entry, exit, moving stop loss, etc. — must be clear. If the rules are not clear, it becomes difficult to make trading decisions.
Trading quotes #14 — Larry Hite
“I have two basic rules about winning in trading as well as in life:
- If you don’t bet, you can’t win
- If you lose all your chips, you can’t bet”
Larry Hite‘s rules are simple but all-encompassing. They don’t just tell you what you shouldn’t do but also hints at the emotions that affect traders. If, out of fear of losing, you choose not to trade, you have definitely denied yourself the opportunity to win. Without participating in the game, you cannot win, so you have to conquer that fear that holds you back from pulling the trigger.
On the other hand, if, out of greed, you trade more than you can and end up losing all your capital, you won’t be able to trade again until you raise another capital. So, you have to protect your capital with all your might.
Trading quotes #15 — Larry Williams
“The most common bad habit I have seen in traders — good and bad ones — is the inability to react correctly to market action.”
This observation is very true, especially among new traders who are always trying to do what every other person is doing, without seeking to understand how the market works. Larry Williams captures that mentality in this statement:
“What you will be looking for is a day that closes above the prior day’s high and most likely ‘breaks’ out to the upside to close above a trading range. This is the twitching worm that causes the public to leap before they look.”
Whatever that instruction means is left to the trader’s interpretation — a new trader will definitely get confused. So, it pays to understand the market and your trading personality. With that, you can create a suitable trading strategy, rather than following another person’s instructions.
Trading quotes #16 — Linda Raschke
“Some of the best trades come when everyone gets very panicky. The crowd can often act very stupidly in the markets. You can picture price fluctuations around an equilibrium level as a rubber band being stretched — if it gets pulled too far, eventually it will snap back. As a short-term trader, I try to wait until the rubber band is stretched to its extreme point.”
Surely, there are different ways of trading the market; you don’t have to do what others are doing. For example, when a breakout trader is cheering for a good breakout signal, a contrarian may be taking the opposite direction and still make profits. What matters is understanding the market action relative to your style of trading. Being a short-term trader, Linda Raschke favors the mean-reversion approach.
Forex trading quotes #17 — Mark Douglas
“Anything can happen.”
After placing a trade, anything can happen — the market can go massively against you, go in your favor, or simply fluctuate around your entry point. You have to have a plan for whatever happens after you place the trade.
“You don’t need to know what is going to happen next in order to make money.”
This truth is quite interesting; you don’t need to predict whether any particular trade will go in your favor to make money with your strategy, provided it has a demonstrable edge in the market. Whether any particular trade is a winner or loser doesn’t matter that much.
“There’s a random distribution between wins and losses for any given set of variables that define an edge.”
No matter the strategy you use, some of your trades would be winners, and some would be losers. The distribution of winners and losers is random. So, you won’t know which will end up as a winner or loser, and interestingly, you don’t need to know.
“An edge is nothing more than an indication of a higher probability of one thing happening over another.”
What matters to you is to make sure that your strategy has an edge in the market you are trading. That is, over a large number of trades, either the number of winners is more than the losers or the amount of money made from the winners supersedes the amount lost from losers when there are more losers.
“Every moment in the market is unique.”
The same trading setup that played out as a winner in the previous trade can play out as a loser in the current trade because the present moment is unique and different from that previous one.
“When you genuinely accept risk, you will be at peace with any outcome.”
Realizing the five quotes above, the legendary Mark Douglas expects you to accept to genuinely accept the risks inherent in each trade — knowing that it can be a loser and being fine with that. Once you achieve this, you will be at peace with whatever outcome you get from each trade.
Quotes about trading #18 — Marty Schwartz
“The most important thing in making money is not letting your losses get out of hand. 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.”
It seems that almost every successful trader talks about managing risks. Marty Schwartz is basically repeating the same thing others said: protect your trading capital so that you make the next trade.
Trading quotes #19 — Michael Carr
“Don’t worry about what the markets are going to do, worry about what you are going to do in response to the markets.”
The quote looks simple, but it carries a lot of meanings. Michael Carr wants you to focus on the thing you can control and not on what you can’t control. You obviously can’t control what the market is going to do, so there’s little sense in worrying about that. What matters to you is how you respond to whatever the market throws at you. You must have a plan for every market situation.
Trading quotes #20 — Michael Marcus
“Being a successful trader also takes courage: the courage to try, the courage to fail, the courage to succeed, and the courage to keep on going when the going gets tough. Perhaps the most important rule is to hold on to your winners and cut your losers.”
Obviously, you need a lot of courage to succeed in trading because it is highly likely that you will blow up your first trading capital or more. And when that happens, you may lose hope about ever succeeding in trading and may not bother raising another capital to trade again. Michael Marcus means that even if you manage to raise another capital, you may become afraid to pull the trigger when your setup occurs in the market.
Trading quotes #21 — Michael Steinhardt
“Make good decisions even with incomplete information. You will never have all the information you need. What matters is what you do with the information you have.”
As long as trading is concerned, you will always feel like you don’t have enough information to make your trading decision. If care is not taken, you will keep chasing more and more information by applying all sorts of indicators on your chart. At the end of the day, the so-called extra information does not add anything new but you end up with analysis paralysis. Michael Steinhardt advises us to learn how to make a decision with the information we have to avoid falling into the trap of analysis paralysis.
Trading quotes #22 — Nicolas Darvas
“I believe in analysis and not forecasting. All a company report and balance sheet can tell you is the past and the present; they cannot tell future.”
Like other successful traders, Nicolas Darvas emphasizes on focusing what the market tells you at the moment, rather than trying to predict what will happen in the future. Every data you have at any point in time can only tell you about the present and the past; the future remains unknown but shouldn’t matter.
Quotes about trading #23 — Alexander Elder
“The goal of a successful trader is to make the best trades. Money is secondary.”
Alexander Elder is one of the legendary traders that created several trading indicators and methods of analyzing the markets. You can imagine how he so much enjoyed the process of identifying trading opportunities that he started creating indicators. For him, it’s all about getting the process right — understanding your strategy and executing your trades the best possible way.
Money is only a by-product of getting the process right. Your focus should be on the process; don’t bother about money. If you have a strategy with an edge and consistently execute your trades well, you will definitely make money in the long run.
Trading quotes #24 — Steve Clark
“Do more of what works and less of what doesn’t.”
Trading is a personal journey. In this journey, you learn by applying yourself and finding out for yourself what works and what does not. Steve Clark tells you that success comes by doing more of what you find out works for you and doing less of what you notice does not work.
Trading quotes #25 — Tom Basso
“I think investment psychology is by far the more important element, followed by risk control, with the least important consideration being the question of where to buy and sell.”
Tom Basso is right about this: mastering your trading psychology and risk control is far more important than knowing where to buy and sell. You can buy a trading strategy that tells you where to buy and sell, but it’s you who have to learn and master risk control and how to manage your trading emotions.
“As long as you learn something from a loss, it’s not really a loss.”
One of the important aspects of trading psychology is knowing how to take a loss. You have to learn something from the loss. That way, it adds value to you as a trader.
Trading quotes #26 — Stanley Druckenmiller
“I believe that good investors are successful not because of their IQ, but because they have an investing discipline.”
Stanley Druckenmiller is an American investor, and hedge fund manager, who worked for George Soros’s Quantum Fund as the lead portfolio manager. What he is saying in that quote is that achieving success in trading is not a question of intelligence; instead, it is dependent on the trader’s ability to be disciplined enough to execute his strategy all the time. A profitable trading strategy if not implemented with discipline would never make any profit.
Trading quotes #27 — William Eckhardt
“The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance.”
William Eckhardt is a renowned commodities and futures trader and fund manager who conducted the famous Turtle Trading experiment with his friend, Richard Dennis. In this quote, he indicates that the win rate of any trading system is not the most important factor. You can have a low win rate and still be profitable because the reward for any win is far more than the loss in a losing trade. A good system should have a good reward/risk ratio.
Trading quotes #28 — Steven Cohen
“I always tell my traders that they would’ve loved the 1990s because it was a fairly easy time to make money. It’s hard to find ideas that aren’t picked over and harder to get real returns and differentiate yourself. We are entering a new environment. The days of big returns are gone.”
What Steve Cohen is saying here is that it is difficult to find an edge in the market these days, and he is right, especially for discretionary trading. With the advent of algorithmic trading, the market has become more efficient, which makes it difficult to find inefficiencies to exploit.
Trading quotes #29 — Richard Driehaus
“If there’s a large move on significant news, either favorable or unfavorable, the stock will usually continue to move in that direction.”
Richard Driehaus is often seen as the father of momentum investing. In this quote, he indicates that once the price gains momentum in one direction, it is likely to remain in that direction. For example, during a news release, the market may interpret the news as favorable or unfavorable and move in the corresponding direction, and it is likely to continue moving in that direction until something else changes its direction.
Trading quotes #30 — Gil Blake
“Whenever I take a position, I like to imagine what it would be like under the worst-case scenario. In doing so, I minimize the confusion if that situation actually develops. In my view, losses are a very important part of trading. When a loss happens, I believe in embracing it.”
What Gil Blake is saying here is that by trying to imagine the worst-case scenario after placing a trade, one can get his or her mind prepared for anything the market does. If the trade ends in a loss, it is easier to accept without getting too attached to the outcome.
Trading quotes #31 — Mark Ritchie
“If I find myself praying about a position, I liquidate immediately.”
Mark Ritchie is a veteran of commodity trading, so he knows what it means to be at the mercy of the market. As a trader, you must put the control in your hands. If the market is going against your position, the best thing is to exit from the trade to avoid a catastrophic loss. There is no point hoping and praying that the market turns around in your favor. Hope is a dangerous thing in trading.
Trading quotes #32 — Joe Ritchie
“Successful traders tend to be instinctive rather than overly analytical.”
Joe Ritchie is an options and commodities trader who founded Chicago Research and Trading (CRT) in 1977. He believes that too much analysis is not always good in trading because there will always be new information you may want to factor into your analysis but trying to do that may lead to analysis paralysis. To be a good trader, there must be a balance between analyzing more information and using your guts.
Trading quotes #33 — Michael Lauer
“This business is not about investing in great companies; it’s about profiting from inefficiently priced stocks.”
This Michael’s quote is one of the tenets of technical analysis. As a technical trader, Michael Lauer believes that everything is already reflected in the price and volume data, so if a trader can find a consistent inefficiency in those, he or she can exploit it to make money. Trading based on technical analysis means that you only need to study the charts to find tradable patterns that reflect market inefficiency and have a high probability of success.
Trader quote #34 — Dana Galante
“One thing I look for is companies with slowing revenue growth who have kept their earnings looking good by cutting expenses. Usually, it’s only a matter of time before their earnings growth slows as well. Another thing I look for is a company that is doing great but has a competitor creeping up that no one is paying attention to.”
Dana Galante is famed for using a short-only strategy. This quote shows how she spots stocks that are good for short positions. Her idea is to short stocks of companies that are not performing well and has formidable competitor.
Trading quotes #35 — Steve Watson
“You have to be willing to accept a certain level of risk, or else you will never pull the trigger. You can’t be afraid to take a loss. The people who are successful in this business are the people who are willing to lose money.”
Steve Watson says it the way it is. Trading requires taking a certain amount of risk to stand a chance to gain. If you are afraid of taking the risk, you won’t be able to pull the trigger. But you should only risk what you can afford to lose because, on many occasions, you will actually lose, and you must be willing to take that loss if you want to succeed.
Trading quotes #36 — Victor Sperandeo
“The key to building wealth is to preserve capital and wait patiently for the right opportunity to make the extraordinary gains.”
Often called Trader Vic, Victor Sperandeo is renowned for having ‘predicted’ the stock market crash of 1987. In this quote, he admonishes traders to preserve their capital and wait for the right moment. There is no point in trying so hard to make money in an unfavorable market and risk losing your capital. Preserve that capital and wait until the market is favorable and you see a high-probability setup before you make a bet.
Trading quotes #37 — Claudio Guazzoni
“I was particularly attracted to the concept of buying undervalued assets, which I became aware was not something that was confined to just leveraged buyouts. Every period of time has its own opportunities where one can find investments that are extremely discounted and have a very well-protected downside.”
Claudio Guazzoni and his strategy is to buy undervalued stocks because they are trading at a discount and, thus, may be said to have lower downside potential. Many successful investors use this value investing approach. Warren Buffet is a huge fan of value investing. The key to using this approach is knowing when to enter the market because it can be dangerous to try to catch a falling knife — it can cut deeply.
Trading quotes #38 — David Shaw
“I grew up with the idea that, if not impossible, it was certainly extremely difficult to beat the market. And even now, I find it remarkable how efficient the markets actually are. It would be nice if all you had to do in order to earn abnormally large returns was to identify some sort of standard pattern in the historical prices of a given stock.”
In this quote, David Shaw points out how difficult trading can be. Some people tend to think that trading is easy — just hitting the buy or sell button based on a certain pattern in the market. Mastering the act of trading goes beyond finding a pattern and placing a trade order.
Trader quotes #39 — Michael Masters
“There’s a temporal difference between speculative flows and price formation, and supply and demand flows”
Michael Masters is trying to let us understand that price movements from retail speculators are different from those caused by smart money. If you want to catch the major price movements, you have to look for patterns of price movement created by smart money.
Trading quotes #40 — Steve Lescarbeau
“I do not attempt to prognosticate the market. I react to what happens in the market.”
Steve Lescarbeau states the obvious here: you don’t impose your expectations on the market; instead, you should react to what you see in the market at that moment. Trading your expectations, rather than what you see in the market can lead to frequent losses. For example, don’t expect that the market will reverse at a particular support or resistance level just because it did the last time it went to that level. Wait until the market actually reverses before you make your trade.
Trading quotes #41 — Mark Minervini
“During a difficult trading environment, your gains will be smaller and less frequent than during a healthy market. When this occurs, remember three words (with a nod to Nike): “Adjust” Do It! Always think of risk in relation to reward. You must adjust your risk as a function of potential reward.”
What Mark Minervini is saying in this quote is that you should be flexible in executing your trading system. Market volatility changes from time to time. You don’t use the same reward size when volatility is low. Adjust your parameters according to the market condition.
Trading quotes #42 — Mark D. Cook
“Most aspiring traders underestimate the time, work, and money required to become successful. To succeed as a trader, one needs complete commitment. Just as in any entrepreneurial venture, you must have a solid business plan, adequate financing, and a willingness to work long hours. Those seeking shortcuts are doomed to failure.”
Mark Cook lays out what an intending trader needs to do to stand a chance of succeeding in trading.
Trader quotes #43 — Ahmet Okumus
“Simple logic: My top ten ideas will always perform better than my top hundred.”
Ahmet Okumus believes in focusing on a few things at once than spreading your hands to capture as many as you can. Concentrating efforts on a few ideas or a few stocks will yield a better result than spreading out to many.
Trading quotes #44 — Alphonse Fletcher Jr.
“Never make a bet you can’t afford to lose!”
This is a very important point; it will save you both your trading capital and emotional capital. Always bet with an amount you can afford to lose. Experienced traders like Alphonse Fletcher advise beginners to not risk more than 1% of their account balance in each trade.
Trading quotes #45 — Randy McKay
“When you’re trading well, you have a better mental attitude. When you’re trading poorly, you start wishing and hoping. Instead of getting into trades you think will work, you end up getting into trades you hope will work. I basically learned that you must get out of your losses immediately.”
In this quote, Randy McKay explains the psychological process that goes on within us when we are trading. The worst thing we can do when trading is to wish and hope that our trades move in our favor when we’re losing. Always cut short the losses and save your capital.
Trading quotes #46 — Howard Seidler
“You can be following your rules exactly and still lose money. In that situation, you certainly haven’t performed poorly as a trader.”
What Howard Seidler said here is very important. The outcome of each trade is random, and there’s nothing you can do about that; there is no way of knowing which trade will have a positive outcome. So, you simply focus on executing your strategy and ignore the outcome of each trade, knowing that provided your strategy has an edge, you will eventually make money.
Trading quotes #47 — Blair Hull
“It’s not the mathematical skill that’s critical to winning; it’s the discipline of being able to stick to the system.”
Blair Hull emphasizes what most traders have said before: having the discipline to stick to your system is what makes you a good trader. Creating the system is just the beginning; the real work is in training your mind to be disciplined.
Trader quotes #48 — Jeff Yass
“The moral is that in trading it’s important to examine the situation from as many angles as possible because your initial impulses are probably going to be wrong. There is never any money to be made in the obvious conclusions.”
Jeff Yass tells us to have a system that allows us to run a comprehensive analysis of the market situation before placing our trades because our first impulse might be wrong.
Trading quotes #49 — Charles Faulkner
“The people who excel in any field are people who realize that the moment is there to be seized and that there are opportunities at every turn. They are more alive to the moment.”
The market is always there, and trading opportunities will always come. Your work as a trader according to Charles Falkner is to seize any trading opportunity you see in the market, but don’t go about chasing after a missed opportunity, because another opportunity will come — just be present to take it.
Trading quotes #50 — Richard Dennis
“You have to minimize your losses and try to preserve capital for those very few instances where you can make a lot in a very short period of time. What you can’t afford to do is throw away your capital on suboptimal trades.”
Richard Dennis was very famous for performing the Turtle Trading experiment with his business partner, William Eckhardt. What he is saying here is that you must do anything you have to do to protect your trading capital so that you can trade when great opportunities come around.
Trading quotes #51 — Monroe Trout
Monroe Trout is an American investor and hedge fund manager. He was interviewed in the New Market Wizards by Jack Schwager.
Toby Crabel
Toby Crabel is mainly famous for his book from the early 1990s and the opening range breakout (ORB).
FAQ:
How can I protect my trading capital effectively?
Maintain control by trading a position size that doesn’t trigger emotional reactions. Additionally, use stop-loss orders, especially when facing a losing position, as advised by Paul Tudor Jones.
What’s the key takeaway about predicting the future in trading?
Ray Dalio reminds traders that predicting the future with certainty is impossible. The focus should be on reacting appropriately to the information available at each moment rather than making assumptions about future market conditions.
Why is consistency important in trading?
Consistency in trading is vital for mastery, but it’s equally important to break routines and adapt to changing market conditions, as highlighted by the renowned trading psychologist mentioned in the content.
