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a few highly skilled players will win most of the games by exploiting the mistakes of weaker players.
Since there is no one left to buy, the market swings around in the other direction and gets you out.
Nowadays, I try to avoid the currencies, because I feel it is a totally political situation; you have to determine what the central banks are going to do.
I think the best hours to trade are often in Europe. If I had a period in which I was going to devote my life to trading, I would want to live in Europe.
always bet less than 5 percent of your money on any one idea.
if a position doesn’t feel right as soon as you put it on, don’t be embarrassed to change your mind and get right out.
If you become unsure about a position, and you don’t know what to do, just get out. You can always come back in. When in doubt, get out
While you are in, you can’t think. When you get out, then you can think clearly again.
the most important rule is to hold on to your winners and cut your losers.
If you don’t stay with your winners, you are not going to be able to pay for the losers.
As long as you stick to your own style, you get the good and bad in your own approach. When you try to incorporate someone else’s style, you often wind up with the worst of both styles.
When the news is wonderful and a market can’t go up, then you want to be sure to be short.
If trading is your life, it is a torturous kind of excitement. But if you are keeping your life in balance, then it is fun.
They have a balanced life; they have fun outside of trading. You can’t sustain it if you don’t have some other focus. Eventually, you wind up overtrading or getting excessively disturbed about temporary failures.
I like to use something I found in Investor’s Daily: the earnings per share (EPS).
if you can trade one market, you can trade them all. The principles are the same. Trading is emotion. It is mass psychology, greed, and fear. It is all the same in every situation.
Taking advantage of potential major winning trades is not only important to the mental health of the trader, but is also critical to winning.
He advises waiting for those trades in which all the key elements line up in one direction. By doing so you greatly enhance the probability of success on each trade. Making lots of trades when the conditions appear to be only marginally in favor of the trade idea has more to do with entertainment than trading success.
The first rule of trading—there are probably many first rules—is don’t get caught in a situation in which you can lose a great deal of money for reasons you don’t understand.
if you take a position and use discipline, you can actually make it.
You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.
They are disciplined enough to take the right size positions. A greedy trader always blows out.
I know where I’m getting out before I get in.
One of the jobs of a good trader is to imagine alternative scenarios.
to make money, you have to hold a position with conviction.
Place your stops at a point that, if reached, will reasonably indicate that the trade is wrong,
If the meaningful stop point implies an uncomfortably large loss per contract, trade a smaller number of contracts.
Most traders are not successful in the first year.
when you have a destabilizing loss, get out, go home, take a nap, do something, but put a little time between that and your next decision.
a certain amount of loss will affect your judgment, so you have to put some time between that loss and the next trade.
you could publish trading rules in the newspaper and no one would follow them.
You should expect the unexpected in this business; expect the extreme.
If you have a loss on a trade after a week or two, you are clearly wrong. Even when you are around breakeven,
I could trade without knowing the name of the market.
Demonstrably, commodities are trending and, arguably, stocks are random.
The best strategy is to avoid the middle like the plague.
First of all, never play macho man with the market. Second, never overtrade.
Now I spend my day trying to make myself as happy and relaxed as I can be.
I am always thinking about losing money as opposed to making money.
When I am trading poorly, I keep reducing my position size. That way, I will be trading my smallest position size when my trading is worst.
Don’t ever average losers. Decrease your trading volume when you are trading poorly; increase your volume when you are trading well. Never trade in situations where you don’t have control. For example, I don’t risk significant amounts of money in front of key reports, since that is gambling, not trading.
If you have a losing position that is making you uncomfortable, the solution is very simple: Get out, because you can always get back in. There is nothing better than a fresh start.
The most important rule of trading is to play great defense, not great offense. Every day I assume every position I have is wrong. I know where my stop risk points are going to be.
Hopefully, I spend the rest of the day enjoying positions that are going in my direction.
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.
If you are a trend follower trying to catch the profits in the middle of a move, you have to use very wide stops. I’m not comfortable doing that. Also, markets trend only about 15 percent of the time; the rest of the time they move sideways.
I really believe that I am going to be so defensive and conservative that I will get my money back.
Everything gets destroyed a hundred times faster than it is built up. It takes one day to tear down something that might have taken ten years to build.
I know from studying history that credit eventually kills all great societies.
