Sunday

Messages From The Billionaire Master Traders.

Sultan of Currencies in the New Market Wizard. He was for eight years Salomon Brothers most successful forex trader.

“Missing an opportunity is as bad as being on the wrong side of a trade. Some people say (after they have the opportunity to realize a profit) ‘I was only playing with the market's money’. That's the most ridiculous thing I ever heard.”

“When you're in a losing streak, your ability to properly assimilate and analyze information starts to become distorted because of the impairment of the confidence factor, which is a by-product of a losing streak. You have to work very hard to restore that confidence, and cutting back trading size helps achieve that goal.”
“I don't have a problem letting my profits run, which many traders do. You have to be able to let your profits run. I don't think you can consistently be a winner trading if you're banking on being right more than 50 percent of the time. You have to figure out how to make money by being right only 20 to 30 percent of the time.”
“Successful traders constantly ask themselves: What am I doing right? What am I doing wrong? How can I do what I am doing better? How can I get more information? Courage is a quality important to excel as a trader. It's not enough to simply have the insight to see something apart from the rest of the crowd, you also need to have the courage to act on it and stay with it.”
“It's very difficult to be different from the rest of the crowd the majority of the time, which by definition is what you're doing if you're a successful trader.”
“So many people want the positive rewards of being a successful trader without being willing to go through the commitment and pain. And there's a lot of pain.”
“Avoid the temptation of wanting to be completely right."
Messages By Trader William Eckhardt

Partner of Richard Dennis, perhaps the best-known futures speculator of our time. Created the famous trading group known as the Turtles. William has averaged over 62 percent return.

“I take the point of view that missing an important trade is a much more serious error than making a bad trade”.
“Buying on retracement is psychologically seductive because you feel you're getting a bargain versus the price you saw a while ago. However, I feel that approach contains more than a drop of poison.”
“You shouldn't plan to risk more than 2 percent on a trade. Although, of course, you could still lose more if the market gaps beyond your intended point of exit.”
“I haven't seen much correlation between good trading and intelligence. Some outstanding traders are quite intelligent, but a few aren't. Many outstanding intelligent people are horrible traders. Average intelligence is enough. Beyond that, emotional makeup is more important.”
“The answer to the question of whether trading can be taught has to be an unqualified yes. Anyone with average intelligence can learn to trade. This is not rocket science.”
“If you bring normal human habits and tendencies to trading, you'll gravitate toward the majority and inevitably lose.”
”Watch idly while profit-taking opportunities arise, but in adversity run like a jackrabbit.”
“One adage that is completely wrongheaded is that you can't go broke taking profits. That's precisely how many traders do go broke. While amateurs go broke taking large losses, professionals go broke by taking small profits.”
“What feels good is often the wrong thing to do.”
“Human nature does not operate to maximize gain but rather to maximize the chance of a gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance.”
“Two of the cardinal sins of trading - giving losses too much rope and taking profits prematurely - are both attempts to make current positions more likely to succeed, to the severe detriment of long-term performance.”
“Don't think about what the market's going to do; you have absolutely no control over that. Think about what you're going to do if it gets there.”
“It is a common notion that after you have profits from your original equity, you can start taking even greater risks because now you are playing with ‘their money’. We are sure you have heard this. Once you have profit, you're playing with ‘their money’. It's a comforting thought. It certainly can't be as bad to lose ‘their money’ as ‘yours’? Right? Wrong. Why should it matter whom the money used to belong to? What matters is who it belongs to now and what to do about it. And in this case it all belongs to you."
Messages By Trader Marty Schwartz

Marty has scored enormous percentage gains in every year since he turned full time trader in 1979. He has done so without ever losing more than 3 percent of his equity on a month-end to month-end basis. In the US Investing Championships held by StanfordUniversity Marty’s performance was nothing short of astounding. In nine of the ten four-month championships he entered, he made more money than all the other traders combined. His average return in these nine contests was 210 percent - non annualized! In his single entry in a one-year contest, he scored a 781 percent return.
"I turned from a loser to a winner when I was able to separate my ego needs from making money. When I was able to accept being wrong. Before that, admitting I was wrong was more upsetting than losing the money.”
“When I became a winner I went from 'I figured it out, therefore it can't be wrong' to 'I figured it out, but if I'm wrong, I'm getting the hell out, because I want to save my money and go on to the next trade.”
“By living the philosophy that my winners are always in front of me, it is not so painful to take a loss. If I make a mistake, so what! “
“Before taking a position always know the amount you are willing to lose.”
“The most important thing is money management, money management, money management. Anybody who is successful will tell you the same thing.”
“I always take my losses quickly. That is probably the key to my success.”
“The best advice I can give to the ordinary guy trying to become a better trader is Learn to take losses. The most important thing in making money is not letting your losses get out of hand."

Messages By Trader Bruce Kovner

Bruce may well be the world's largest trader in the inter-bank currency and futures markets. In 1987 he scored profits in excess of $300 million for himself and the fortunate investors in his funds. Two thousand dollars invested with Kovner in early 1978 was worth over $1,000,000 ten years later.

“Michael Marcus taught me one other thing that is absolutely critical: 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.”
“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."

Messages By Trader Paul Tudor Jones

Paul has accomplished what many thought impossible: combined five consecutive, triple-digit return years with very low equity retracement. Took a $1.5 million account in 1984 to $330 million account in 1988.

“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. Don't focus on making money; focus on protecting what you have."

Messages By Trader Van Tharp


Van Tharp was also featured in Jack Schwagers Market Wizards. He wrote what by now is one of the trading classics.

"You do not have a trading system unless you know exactly when you will get out of the market position at the time you enter it.”
“Your worst-case exit, which is designed to preserve your capital, should be determined ahead of time.”
“In addition, you should also have some idea about how you plan to take profits and a strategy for letting your profits run.”
“People avoid looking for good exits because exits do not give them control over the market. However, exits do control something. They control whether you make a profit or a loss, and they control just how big that profit or loss will be. Since they do so much, perhaps they are worthy of a lot more study on the part of most people.”
“There are a lot of problems to solve with exits. If the worst case does not happen (i.e., so you don't get stopped out), then the job of your system is to allow you to make the most profit possible and give the least amount of it back. Only your exits do this!”
“There are many different classifications of exits other than your initial stop loss. These include exits that produce a loss but reduce your initial risk, exits that maximize profits, and exits that keep you from giving back too much money, and psychological exits.”
“In order to maximize your profits (let them run), you must be willing to give some of them back.”
“In fact, the ironic part of system design is if you want to maximize profits, you must be willing to give back a great deal of the profits you have already accumulated.”
“You can't make money if you're not willing to lose. It's like breathing in, but not being willing to breathe out. Various types of exits will help you do this (i.e., breathe fully), including trailing stops and the percent retracement stop.”
“There are four general categories of exits: 1. Exits that make your initial loss smaller; 2. Exits that maximize your profits; 3. Exits that minimize how much profit you give back; and 4. Psychological Exits.”
“Psychological factors always come into play in any sort of trading.”
“When you enter a position it is essential to know the point at which you will get out of the position in order to preserve your capital.”
“If you are risking over 3 percent of your trading capital then you are a 'gunslinger' and had better understand the risk you are taking for the reward you seek.”
“My first advice to anyone is to look to yourself as the source of everything that happens in your life.”
“Make a list of everything that can go wrong and determine how you will respond to that situation. That will be the key to your success - knowing how to respond to the unexpected."

Messages By Trader Tom Baldwin


Left a managerial job at a meatpacking plant with $25,000 in hand and now trades up to $2 billion worth of T-bond futures in a day.

“The best traders have no ego. To be a great trader, you have to have a big enough ego in the sense that you have confidence in yourself. You cannot let ego get in the way of a trade that is a loser; you have to swallow your pride and get out.”
"I turned from a loser to a winner when I was able to separate my ego needs from making money. When I was able to accept being wrong. Before that, admitting I was wrong was more upsetting than losing the money.”
“When I became a winner I went from 'I figured it out, therefore it can't be wrong' to 'I figured it out, but if I'm wrong, I'm getting the hell out, because I want to save my money and go on to the next trade.'”
“By living the philosophy that my winners are always in front of me, it is not so painful to take a loss. If I make a mistake, so what!”
“My attitude is: Never risk your family's security.”
“Whenever you get hit, you are very upset emotionally. Most traders try to make it back immediately; they try to play bigger. Whenever you try to get all your losses back at once, you are most often doomed to fail.”
“After a devastating loss, I always play very small and try to get black ink, black ink. It's not how much money I make, but just getting my rhythm and confidence back.”
“Before taking a position always know the amount you are willing to lose.”
”The most important thing is money management, money management, money management. Anybody who is successful will tell you the same thing.”
“I always take my losses quickly. That is probably the key to my success.”
“The best advice I can give to the ordinary guy trying to become a better trader is Learn to take losses. The most important thing in making money is not letting your losses get out of hand."

Messages By Trader David Ryan


In 1982 he began working for William O'Neil and in 1985 achieved a degree of fame when he won the US Investing Championships. For the three years as a whole his compounded return was a remarkable 1,379 percent.

“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. “

Messages By Trader William O'Neil


In 1962 he turned an initial $5,000 investment into $200,000, original Market Wizard.

“My philosophy is that all stocks are bad. There are no good stocks unless they go up in price. If they go down instead, you have to cut your losses fast.”
“The secret for winning in the stock market does not include being right all the time. “

Messages By Trader Ed Seykota


Realized an astounding 250,000 % return on his accounts over 16 years. Normalized for withdrawals, the account theoretically was up several million percent.

“I prefer not to dwell on past situations. I tend to cut bad trades as soon as possible, forget them, and then move on to new opportunities.”
“The elements of good trading are: 1. Cutting losses, 2. Cutting losses, and 3. Cutting losses. If you can follow these three rules, you may have a chance. “
“I set protective stops at the same time I enter a trade. I normally move these stops in to lock in a profit as the trend continues.”
“I intend to risk below 5 percent on a trade, allowing for poor executions.”
“The trading rules I live by are: 1. Cut losses. 2. Ride winners. 3. Keep bets small. 4. Follow the rules without question. 5. Know when to break the rules. “

Messages By Trader Gary Bielfeldt


Starting with $1,000 and only able to trade one contract, his success (trading size) became so great that he had grown to the point that government established speculative limits became an impediment to his trading.

“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 losses, 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. “

Messages By Trader Edwin Lefevre


Real name Jesse Livermore. He wrote the all time classic 'How to Trade in Stocks'. One of the old breeds, he became one of the most successful traders of all times.

“It was the same with all. They would not take a small loss at first but had held on, in the hope of a recovery that would ‘let them out even’. And prices had sunk and sunk until the loss was so great that it seemed only proper to hold on, if need be a year, for sooner or later prices must come back. But the break "shook them out," and prices just went so much lower because so many people had to sell, whether they would or not.”
“The spectator's chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when the market goes against you, you hope that every day will be the last day -- and you lose more than you should had you not listened to hope -- to the same ally that is so potent a success-bringer to empire builders and pioneers, big and little.

And when the market goes your way you become fearful that the next day will take away your profit, and you get out -- to soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit.”

“It never was my thinking that made big money for me. It was always my sitting. Got that? My sitting tight! “

Messages By Trader George Soros


On Black Wednesday (September 16, 1992), Soros became immediately famous when he sold short more than $10 billion worth of pounds, profiting from the Bank of England's reluctance to either raise its interest rates to levels comparable to those of other European Exchange Rate Mechanism countries or to float its currency.

Finally, the Bank of England was forced to withdraw the currency out of the European Exchange Rate Mechanism and to devalue the pound sterling, and Soros earned an estimated US$ 1.1 billion in the process. He was dubbed "the man who broke the Bank of England". 

 
"I am no better than the next trader, just quicker at realizing my losses and moving on to the next trade."

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