Tell me, do you like reading quotes? It may seem that quotes are just statements. Just a random opinion, some text written on a piece of paper. However, at the right time and at a specific period of your life, these statements can really change its course.
Not entirely, of course. But if you come across the right quote, it may encourage you and have a positive impact on your trading discipline, for example. Today we’ll be quotes from famous trading gurus and we’ll try to analyze them. Are you with us?
1) There is no secret strategy in trading
“There is no single market secret to discover, no single correct way to trade the markets. Those seeking the one true answer to the markets haven’t even gotten as far as asking the right question, let alone getting the right answer.”
– Jack D. Schwager, author of Stock Market Wizards
Reread this quote thoroughly. Jack says that those looking for the “best” and “most profitable” trading strategy are still at the beginner stage. Schwager is convinced that the best strategy is the one that suits your personality. Finding it takes hundreds of hours of trading and studying charts.
And in order to find the strength to work on such a volume, you need one and only quality – passion for the markets. Do you have this passion? To give yourself an honest answer, first ask yourself this question:
“Am I willing to spend hundreds of hours trading instead of playing games and watching movies? Or did I just come here for easy money? ”
2) The key task of a trader is preparation
We continue to quote Schwager:
“The hard work in trading comes in the preparation. The actual process of trading, however, should be effortless.”
Successful traders say the best trades require little effort. Do you know why? Traders are 100% ready for them.
As Schwager points out, the hard work lies in the preparation. The process of preparation usually includes the following steps:
- Create a trading plan
- Analyze a trading chart
- Evaluate market entry based on your checklist and your trading system
- Identify your entry and exit points
For a trade to go smoothly, traders have to prepare for it.
Those who put in their efforts and hard work in the trading process instead of preparation often run out of money.
Those who treat earnings as a reward for their work always make more profit in the end.
3) Find an «easy prey»
“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 do nothing in the meantime.”
— Jim Rogers, the co-founder of the Quantum Fund and Soros Fund Management
Jim Rogers confirms that discipline is the key to success. Traders often get impatient and enter the market when there is no clear signal. For example, they can trade a candlestick combination on a 4-hour timeframe when there are 2 hours left before the candle closes. Being impatient, you always overtrade and pay the “price of opportunity”:
You waste your time, effort and money on trades that are very unlikely to work out. And you end up missing out on trades that are worth your attention (and money).
To make money, you need to take advantage of market inefficiencies. To use them, you need to learn to be more patient.
4) Money is a result, not a process
“If a trader is motivated by the money, then it is the wrong reason. A truly successful trader has got to be involved and into the trading, the money is the side issue… “
– Bill Lipschutz, trader and the co-founder and Director of Portfolio Management at Hathersage Capital Management
Traders often ask: “How much can you earn in a week/month by trading X stocks?” They see an asset as a holy grail that is about to make them rich.
When a trader puts money first, this is a warning sign: “You are doing something wrong. Wake up!”
Of course, money should spark interest in trading. But they cannot be the ultimate goal. In fact, the trader’s goal is to find one good trade. Then evaluate the result. Then find one good trade again. And that’s how this whole process works.
So Bill Lipschutz confirms a simple idea: money won’t help you get through difficulties. Passion and love for the very process of trading will.
5) Know when to exit a trade
An essential habit of a disciplined trader is to know when to exit a trade.
“Don’t worry about what the markets are going to do, worry about what you are going to do in response to the markets “
-Michael Carr, speaker, full-time trader, a lead adviser at FMP Wealth Advisers
In this quote, Michael gives us a very important piece of advice. It’s so important where the market goes: up, down, or goes flat. What matters is how we react to this market movement, and whether we react at all.
To be able to work in uncertainty (which is a constant for trading), it is important to have two useful tools at hand:
- Trading plan for the asset. For example, for BTC/USD
- And a strategy. You should determine your entry point and criteria for exiting a trade in advance, etc.
The price can move in either direction. So it doesn’t matter where the market goes: what matters is how you respond.
6) 90% of a trader’s work is self-improvement.
In this article we have discussed why:
- There is no secret strategy in trading
- You need to plan your trade in advance
- Be patient and wait for easy and simple trades
- You shouldn’t chase money
- You should know when you exit a trade
These 5 simple rules will help you change your trading style and make your trading more effective. The reason you’re earning less than you want may be because you’re breaking one of these rules.
There is always one solution: replace the old bad habits with new, good ones. There is no other way.
Albert Einstein said:
“Insanity is doing the same thing over and over again and expecting a different result.”
Einstein was a genius and an expert in science. And we want to become experts in trading, so we won’t make the same mistake twice. We’ve learned our lesson and we’ll do our best to become traders with exceptional self-discipline, right?
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