Top Ten: Trading Quotes Part 1
In this week’s Top Ten installment, I want to share the first five of my top ten trading quotes, these quotes are from traders who I admire and respect, I have these quotes framed and they hang on the wall of my office as a constant reminder and reinforcement of positive principles and habits.
Below I list the first five of my top ten quotes in no particular order along with an explanation of why the quote is meaningful.
1. “It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn” J Livermore
This quote from one of the most famous speculators of all time is it is a brilliant reminder that patience is a key constituent to to successful trading coupled with an ability to let your trade thesis’s play out to avoid the natural inclination to tinker with your trades once they are set.
2.“I also don’t lose much on my trades, because I wait for the exact right moment. Most people will not wait for an environment to tip itself off. They will walk into the forest when it is still dark, while I wait until it gets light. Although the cheetah is the fastest animal in the world and can catch any animal on the plains, it will wait until it is absolutely sure it can catch its prey. It may hide in the bush for a week, waiting for just the right moment. It will wait for a baby antelope, and not just any baby antelope, preferably one that is sick or lame. Only then, when there is no chance it can lose it’s prey, does it attack. That, to me, is the epitome of professional trading” M Weinstein
Again another one of my favorite quotes reinforces the necessity for patience in trading, this quote reminds me to maintain the rifle shot approach to my trading as opposed to the scatter gun. It reinforces the stalking nature of this business, the need to watch and wait for the premium set ups to present themselves.
3.”Mathematical science, which is the only real science that the entire civilized world has agreed upon, furnishes unmistakable proof of history repeating itself and shows that the cycle theory, or harmonic analysis, is the only thing that we can rely upon to ascertain the future.” W D Gann
This gem from Gann reinforces the principle of defining and trading price patterns that repeat or at the very least rhyme. Markets are cyclical in nature and understanding the cyclical relationship of price patterns is a core principle in my trading.
4. “Make sure that you have the edge. Know what your edge is and employ rigid risk control rules. Basically, when you get down to it, to make money, you need to have an edge and employ good money management. Good money management alone isn’t going to increase your edge at all. If your system isn’t any good, you’re still going to lose money, no matter how effective your money management rules are. But if you have an approach that makes money, then money management can make the difference between success and failure” M Trout
This quote is a positive reinforcement of the principle of developing a trading strategy with a positive edge and then executing the trading strategy with a tested risk and money management strategy allowing the edge to play out over time.
5. “To be a successful trader, you have to be able to admit mistakes. People who are very bright don’t make very many mistakes. In a sense, they generally are correct. In trading, however, the person who can easily admit to being wrong is the one who walks away a winner. Besides trading, there is probably no other profession where you have to admit you’re wrong. In trading, you can’t hide your failures. Your equity provides a daily reflection of your performance. The trader who tries to blame his losses on external events will never learn from his mistakes. For a trader, rationalization is a guaranteed road to ultimate failure.” V Sperandeo
This pearl of wisdom is a constant reminder that one of the essential aspects of excellence in trading and in life is the requirement to disengage from your ego, to admit your mistakes and correct them at the earliest opportunity, many traders struggle with the need to be right versus the profitable trading, as explained above better to admit your mistakes and correct them at the first opportunity than to let stubbornness or ego impact your performance.
Be sure to catch next weeks Top Ten segment for the final five pearls of trading wisdom.