♂ Success And Bouncing Back From Your Failure
Victor Sperandeo
Famously known as Wall Street's "Trader Vic".
The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading.
Bruce Kovner
Has earned as much as $300 million in one year from trading
You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael [Marcus] 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. Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I'm getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis. I never think about other people who may be using the same stop, because the market shouldn't go there if I am right. 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. If you personalize losses, you can't trade.
Michael Marcus
Turned $30,000 into $80 million
Taking advantage of potential major winning trades is not only important to the mental health of the trader but is also critical to winning. Letting winners ride is every bit as important as cutting losses short. If you don't stay with your winners, you are not going to be able to pay for the losers. In addition to not overtrading, it is important to commit to an exit point on every trade. Protective stops are very important because they force this commitment on the trader.
Jack D Schwager
Author "The New Market Wizards"
Trading provides one of the last great frontiers of opportunity in our economy. It is one of the very few ways in which an individual can start with a relatively small bankroll and actually become a multimillionaire. Of course, only a handful of individuals succeed in turning this feat, but at least the opportunity exists. A rigid stop-loss rule is an essential ingredient to the trading approach of many successful traders. Winning streaks lead to complacency, and complacency leads to sloppy trading.
Richard Dennis
Turned $400 into $200 million trading futures
When things go bad, traders shouldn't stick their head in the sand and just hope it gets better. You should always have a worst-case point. The only choice should be to get out quicker. The worst mistake a trader can make is to miss a major profit opportunity. 95 percent of profits come from only 5 percent of the trades.
Jerry Parker
Probably my best technique is not picking up the phone to close out a winning trade.
Bernard Baruch
Show me the charts, and I'll tell you the news. Have an opinion on what the market should do but don't decide what the market will do. Be happy with a percentage of the move.
Paul Tudor Jones
Turned $1.5 million into $300 million in five years
That cotton trade was almost the deal breaker for me. It was at that point that I said, "Mr. Stupid, why risk everything on one trade? Why not make your life a pursuit of happiness rather than pain?" I had to learn discipline and money management. I decided that I was going to become very disciplined and businesslike about my trading. I spend my day trying to make myself as happy and relaxed as I can be. If I have positions going against me, I get right out; if they are going for me, I keep them. I am always thinking about losing money as opposed to making money. Risk control is the most important thing in trading. I keep cutting my position size down as I have losing trades. 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. If I have positions going against me, I get right out; if they are going for me, I keep them... Risk control is the most important thing in 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. I do that so I can define my maximum possible draw down. Hopefully, I spend the rest of the day enjoying positions that are going in my direction. If they are going against me, then I have a game plan for getting out. 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. I know that to be successful, I have to be frightened. Don't focus on making money; focus on protecting what you have.
Gary Bielfeldt
The most important thing is to have a method for staying with your winners and getting rid of your losers. By having thought out your objective and having a strategy for getting out in case the market trend changes, you greatly increase the potential for staying in your winning positions. The traits of a successful trader: The most important is discipline - I am sure everyone says that. Second, you have to have patience; if you have a good trade on, you have to be able to stay with it. Third, you need courage to go into the market, and courage comes from adequate capitalization. Fourth, you must have a willingness to lose; that is also related to adequate capitalization. Fifth, you need a strong desire to win. You have to have the attitude that if a trade loses, you can handle it without any problem and come back to do the next trade. You can't let a losing trade get to you emotionally. If a trade doesn't look right, I get out and take a small loss.
Larry Hite
Turned a $2 million managed account into $800 million in 8 years
Throughout my financial career, I have continually witnessed examples of other people that I have known being ruined by a failure to respect risk. If you don't take a hard look at risk, it will take you. If you argue with the market, you will lose. It is incredible how rich you can get by not being perfect. Never risk more than 1% of your total equity in any one trade. By risking 1%, I am indifferent to any individual trade. Keeping your risk small and constant is absolutely critical. I have two basic rules about winning in trading as well as in life: 1. If you don't bet, you can't win. 2. If you lose all your chips, you can't bet. Frankly, I don't see markets. I see risks, rewards, and money.
Michael Steinhardt
The word 'trading' is not the way I think of things. I may be a trader in the sense that my frequency of transactions is relatively high, but the word 'investing' would apply just as much, if not more. In my mind, trading implies an anticipation of a sale at the time of purchase. Good trading is a peculiar balance between the conviction to follow your ideas and the flexibility to recognize when you have made a mistake. The balance between confidence and humility is best learned through extensive experience and mistakes. There should always be respect for the person on the other side of the trade. Always ask yourself: Why does he want to sell? What does he know that I don't? All great traders are seekers of truth. The markets are always changing, and the successful trader needs to adapt to these changes.
William O'Neil
Turned $5,000 into $200,000 in 1962 with 3 consecutive trades
Letting losses run is the most serious mistake made by most investors. With an individual stock, you absolutely have to have a stop-loss point, because you never know how far down the stock is going. I remember selling a $100 stock one time and it eventually went to $1. I didn't have any idea it was going down that far, but what would have happened if I had held on to it? One mistake like that and you can't come back. The majority of unskilled investors stubbornly hold onto their losses when the losses are small and reasonable. They could get out cheaply, but being emotionally involved and human, they keep waiting and hoping until their loss gets much bigger and costs them dearly. ... Some investors have trouble making decisions to buy or sell. In other words, they vacillate and can't make up their minds. They are unsure because they really don't know what they are doing. They do not have a plan, a set of principles, or rules to guide them and, therefore, are uncertain of what they should be doing.
David Ryan
Won Stanford University's Investing Championships and earned 1,400% return over 3 years
The more disciplined you can get, the better you are going to do in the market. The more you listen to tips and rumors, the more money you're likely to lose. My percentage of winners is only about 50/50, because I cut my losers very quickly. The maximum loss I allow is 7 percent, and usually I am out of a losing stock a lot quicker. I make my money on the few stocks a year that double and triple in price. The profits in those trades easily makes up for all the small losers. If you really think the stock is going to make a big move - and that should be the only reason you are buying the stock to begin with - then there is no reason to haggle over an eighth of a point. Just buy the stock. The same thing applies to the downside; if you think the stock is going to drop, just sell it. The single most important advice I can give anybody is: Learn from your mistakes. That is the only way to become a successful trader.
Famously known as Wall Street's "Trader Vic".
The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading.
Bruce Kovner
Has earned as much as $300 million in one year from trading
You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael [Marcus] 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. Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I'm getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis. I never think about other people who may be using the same stop, because the market shouldn't go there if I am right. 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. If you personalize losses, you can't trade.
Michael Marcus
Turned $30,000 into $80 million
Taking advantage of potential major winning trades is not only important to the mental health of the trader but is also critical to winning. Letting winners ride is every bit as important as cutting losses short. If you don't stay with your winners, you are not going to be able to pay for the losers. In addition to not overtrading, it is important to commit to an exit point on every trade. Protective stops are very important because they force this commitment on the trader.
Jack D Schwager
Author "The New Market Wizards"
Trading provides one of the last great frontiers of opportunity in our economy. It is one of the very few ways in which an individual can start with a relatively small bankroll and actually become a multimillionaire. Of course, only a handful of individuals succeed in turning this feat, but at least the opportunity exists. A rigid stop-loss rule is an essential ingredient to the trading approach of many successful traders. Winning streaks lead to complacency, and complacency leads to sloppy trading.
Richard Dennis
Turned $400 into $200 million trading futures
When things go bad, traders shouldn't stick their head in the sand and just hope it gets better. You should always have a worst-case point. The only choice should be to get out quicker. The worst mistake a trader can make is to miss a major profit opportunity. 95 percent of profits come from only 5 percent of the trades.
Jerry Parker
Probably my best technique is not picking up the phone to close out a winning trade.
Bernard Baruch
Show me the charts, and I'll tell you the news. Have an opinion on what the market should do but don't decide what the market will do. Be happy with a percentage of the move.
Paul Tudor Jones
Turned $1.5 million into $300 million in five years
That cotton trade was almost the deal breaker for me. It was at that point that I said, "Mr. Stupid, why risk everything on one trade? Why not make your life a pursuit of happiness rather than pain?" I had to learn discipline and money management. I decided that I was going to become very disciplined and businesslike about my trading. I spend my day trying to make myself as happy and relaxed as I can be. If I have positions going against me, I get right out; if they are going for me, I keep them. I am always thinking about losing money as opposed to making money. Risk control is the most important thing in trading. I keep cutting my position size down as I have losing trades. 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. If I have positions going against me, I get right out; if they are going for me, I keep them... Risk control is the most important thing in 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. I do that so I can define my maximum possible draw down. Hopefully, I spend the rest of the day enjoying positions that are going in my direction. If they are going against me, then I have a game plan for getting out. 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. I know that to be successful, I have to be frightened. Don't focus on making money; focus on protecting what you have.
Gary Bielfeldt
The most important thing is to have a method for staying with your winners and getting rid of your losers. By having thought out your objective and having a strategy for getting out in case the market trend changes, you greatly increase the potential for staying in your winning positions. The traits of a successful trader: The most important is discipline - I am sure everyone says that. Second, you have to have patience; if you have a good trade on, you have to be able to stay with it. Third, you need courage to go into the market, and courage comes from adequate capitalization. Fourth, you must have a willingness to lose; that is also related to adequate capitalization. Fifth, you need a strong desire to win. You have to have the attitude that if a trade loses, you can handle it without any problem and come back to do the next trade. You can't let a losing trade get to you emotionally. If a trade doesn't look right, I get out and take a small loss.
Larry Hite
Turned a $2 million managed account into $800 million in 8 years
Throughout my financial career, I have continually witnessed examples of other people that I have known being ruined by a failure to respect risk. If you don't take a hard look at risk, it will take you. If you argue with the market, you will lose. It is incredible how rich you can get by not being perfect. Never risk more than 1% of your total equity in any one trade. By risking 1%, I am indifferent to any individual trade. Keeping your risk small and constant is absolutely critical. I have two basic rules about winning in trading as well as in life: 1. If you don't bet, you can't win. 2. If you lose all your chips, you can't bet. Frankly, I don't see markets. I see risks, rewards, and money.
Michael Steinhardt
The word 'trading' is not the way I think of things. I may be a trader in the sense that my frequency of transactions is relatively high, but the word 'investing' would apply just as much, if not more. In my mind, trading implies an anticipation of a sale at the time of purchase. Good trading is a peculiar balance between the conviction to follow your ideas and the flexibility to recognize when you have made a mistake. The balance between confidence and humility is best learned through extensive experience and mistakes. There should always be respect for the person on the other side of the trade. Always ask yourself: Why does he want to sell? What does he know that I don't? All great traders are seekers of truth. The markets are always changing, and the successful trader needs to adapt to these changes.
William O'Neil
Turned $5,000 into $200,000 in 1962 with 3 consecutive trades
Letting losses run is the most serious mistake made by most investors. With an individual stock, you absolutely have to have a stop-loss point, because you never know how far down the stock is going. I remember selling a $100 stock one time and it eventually went to $1. I didn't have any idea it was going down that far, but what would have happened if I had held on to it? One mistake like that and you can't come back. The majority of unskilled investors stubbornly hold onto their losses when the losses are small and reasonable. They could get out cheaply, but being emotionally involved and human, they keep waiting and hoping until their loss gets much bigger and costs them dearly. ... Some investors have trouble making decisions to buy or sell. In other words, they vacillate and can't make up their minds. They are unsure because they really don't know what they are doing. They do not have a plan, a set of principles, or rules to guide them and, therefore, are uncertain of what they should be doing.
David Ryan
Won Stanford University's Investing Championships and earned 1,400% return over 3 years
The more disciplined you can get, the better you are going to do in the market. The more you listen to tips and rumors, the more money you're likely to lose. My percentage of winners is only about 50/50, because I cut my losers very quickly. The maximum loss I allow is 7 percent, and usually I am out of a losing stock a lot quicker. I make my money on the few stocks a year that double and triple in price. The profits in those trades easily makes up for all the small losers. If you really think the stock is going to make a big move - and that should be the only reason you are buying the stock to begin with - then there is no reason to haggle over an eighth of a point. Just buy the stock. The same thing applies to the downside; if you think the stock is going to drop, just sell it. The single most important advice I can give anybody is: Learn from your mistakes. That is the only way to become a successful trader.
posted by yuyuaaron at 1:05 PM
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