Trading quotes from the best traders
Alexander Elder
“Show me a trader with good records and I’ll show you a good trader.”
– Dr. Alexander Elder, author of several books including Come into my trading room and Trading for a living and partner in SpikeTrade.
Warren Buffett
“Risk comes from not knowing what you’re doing.”
– Warren Buffett, 4th richest man in the world
Peter Lynch
“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.”
– Peter Lynch, Mutual fund manager
Jesse Livermore
“Speculators without a plan are like a general without a strategy, and therefore without an actionable battle plan. Speculators without a single clear plan can only act and react, act and react, to the slings and arrows of stock market misfortune, until they are defeated.” and “Sell down to your sleeping level” (have an adequate amount of risk in your portfolio so you can sleep well at night)
– Jesse Livermore, author of Reminiscences of a Stock Operator
Larry Hite
“If you diversify, control your risk, and go with the trend, it just has to work.” – Larry Hite, famous hedge fund manager
Brett N. Steenbarger on trading psychology
“The Journal is a business plan. The right plan, executed faithfully, can be the difference between success and failure in any endeavor.”
– Brett N. Steenbarger, Ph.D. – author of The Psychology of Trading: Tools and Techniques for Minding the Markets , Head of Trader Development at Tudor Investments and contributor at Forbes.
Quotes from famous traders
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World famous investor Warren Buffett
Some more great trading quotes
Charlie Munger
“Spend each day trying to be a little wiser than you were when you woke up.”
– Charlie Munger, American billionaire investor and vice chairman of Berkshire Hathaway, the conglomerate controlled by Warren Buffett.
Paul Samuelson
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas!”
– Paul Samuelson, Nobel prize winning American economist
Robert Olstein
“The desire to perform all the time is usually a barrier to performing over time.”
– Robert A. Olstein is the Chairman and Chief Investment Officer of The Olstein Funds.
Jack D. Schwager on trading strategies
“Think about the psychological process involved. At the beginning, the trader fell for the lure of making easy money. When the stock declined to $18, he felt a little anxious. When it fell to $17, he felt the onset of panic. When the stock slid to $15, it was pure panic. When he finally got out, he felt a sense of relief – which is somewhat ironic since he had just lost 70 percent of his money. There’s nothing logical about this process. It’s all an emotional pitfall. Planning where to get out before putting on the trade is a means of enforcing emotional discipline and accepting that you might lose money.” – Jack D. Schwager, author of The Market Wizards series books
Stanley Druckenmiller
“I never use valuation to time the market. I use liquidity considerations and technical analysis for timing. Valuation only tells me how far the market can go once a catalyst enters the picture to change the market direction. The catalyst is liquidity, and hopefully my technical analysis will pick it up.”
– Stanley Druckenmiller, legendary investor and hedge fund manager of Duquesne Capital
William J. O’Neil
“The whole secret to achieving a winning trade and losing in the stock market is to lose the least amount possible when you’re not right.”– William J. O’Neil, author of several books including How to Make Money in Stocks, inventor of CANSLIM and founder of the national financial newspaper Investor’s Business Daily, which competes with The Wall Street Journal.
Warren Buffett (quote #2)
“The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot.”
– Warren Buffett, 4th richest man in the world
Brian Shannon
“You need a well-thought-out and profitable trading strategy which anticipates all potential scenarios to keep you from making impulsive and emotional decisions during market hours. You are being bombarded constantly with new information from peers, television, price action, websites, etc. Trading stocks is a business, and if you want your business to thrive you must have a plan which you execute flawlessly.” – Brian Shannon, from his book Technical Analysis Using Multiple Timeframes
Benjamin Graham
‘‘Before you invest, you must ensure that you have realistically assessed your probability of being right and how you will react to the consequences of being wrong”.
Benjamin Graham – The Intelligent Investor
Richard D. Wyckoff
“You cannot be successful at trading any more than you can be at mining, manufacturing, doctoring or anything else, unless you are trained for it. And by “training” I don’t mean an occasional dab.”
“We succeed in proportion to the amount of energy and enterprise we use in going after results. Trading success is not for the man who is willing to sit down and wait for something to fall into his lap.” – Richard D. Wyckoff
John Murphy on technical analysis
“Always be a student and keep learning.”
– John Murphy, author of The Visual Investor: How to Spot Market Trends as well as other books and Chief Technical Analyst at StockCharts.com
Trading Psychology
Mindset and Discipline
Trading psychology plays a crucial role in a trader’s success. A trader’s mindset and discipline are essential in navigating the financial markets. A successful trader must have a clear understanding of their own strengths, weaknesses, and emotions to make informed decisions. Discipline is critical in sticking to a trading strategy, managing risk, and avoiding impulsive decisions.
As Mark Douglas, a renowned trading psychologist, emphasizes, “If your goal is to trade like a professional and be a consistent winner, then you must start from the premise that the solutions are in your mind and not in the market.” A trader’s mindset must be focused on the process, not just the outcome. By cultivating a disciplined mindset, traders can overcome fear, greed, and other emotions that can lead to poor decision-making.
Overcoming Uncertainty and Probability
Trading involves dealing with uncertainty and probability. Markets are inherently unpredictable, and traders must accept this reality. As Mark Douglas notes, “When you achieve complete acceptance of the uncertainty of each edge and the uniqueness of each moment, your frustration with trading will end.” By embracing uncertainty, traders can focus on probabilities rather than certainties.
Traders must understand that each trade has an uncertain outcome, but by thinking in probabilities, they can reduce emotional stress and make more informed decisions. As Douglas emphasizes, “The degree to which you think you know, assume you know, or in any way need to know what is going to happen next is equal to the degree to which you will fail as a trader.” By accepting uncertainty and focusing on probabilities, traders can develop a more effective trading strategy.
Risk Management
Balancing Risk and Reward
Risk management is a critical aspect of trading. Traders must balance risk and reward to achieve long-term success. As Warren Buffett notes, “Risk comes from not knowing what you’re doing.” Traders must have a deep understanding of their trading strategy, including the potential risks and rewards.
To balance risk and reward, traders must set clear goals and risk parameters. As Mark Douglas emphasizes, “Predefine what a loss is in every potential trade.” By defining risk in advance, traders can limit their losses and protect their trading capital. Traders must also be willing to cut their losses short and take profits systematically.
Effective risk management involves managing investment risks, implementing risk control, and accepting trade losses as a necessary part of trading. As Paul Tudor Jones notes, “The most important rule of trading is to play great defense, not great offense.” By prioritizing risk management, traders can protect their trading capital and achieve long-term success.