6 Insightful Quotes to Master Your Trading
BY Chris Andreou|September 29, 2021
The ability to master trading psychology is what separates successful traders from unsuccessful ones.
Whether you’re an experienced trader or just starting in the forex world, we’ve compiled a list of trading quotes from six of the most successful investors and traders.
There’s no better way to learn trading psychology than from the experts themselves.
1) Being Successful Comes With Time
“No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.”
As obvious or predictable as it may be, no article could be written or list could be made without including a quote by arguably the most successful investor of all time.
With that in mind, let us introduce this piece with a memorable two-liner from the Warren Buffet, otherwise known as the “Oracle of Omaha”.
CEO and Chairman of Berkshire Hathaway – a multinational conglomerate holding company through which Buffet has made investments since the 70s – Buffett holds a net worth of over $100 billion.
The quote offers an important lesson for budding traders to learn before they get started.
Often, beginners kick off their forex trading journey on the wrong foot, dreaming and believing they’ll be an instant success and become rich overnight. However, in the end, these dreams are hopeless, because, in reality, it’s highly unlikely for any trader to just become successful immediately.
Success takes time, research, patience, and sometimes, a little luck. Smart traders and investors spend the time learning, practising, analysing the markets and perfecting their strategy and approach. You’ll need a real mix of hard work, dedication and time.
2) Be Patient & Don’t Overtrade
“If most traders would learn to sit on their hands 50 percent of the time, they would make a lot more money.”
The interesting thing about this quote is that it’s open to interpretation. What does it really say?
Bill Lipschutz, a man known for his sheer directness, displays the importance of patience. Often, beginners are so quick to make a quick profit, they’ll overtrade. A mistake that more often than not leads to increased losses.
Rather than diving straight into the deep waters of the forex market at every opportunity, it’s wise to put together a trading strategy and stick to it. The best way to avoid unnecessary losses is by being patient and disciplined. Only enter trades where predetermined conditions have been met.
If you haven’t heard of Lipschutz, his story is quite iconic. A true example of someone that learned his lesson the hard way. His grandmother’s death ultimately handed him $12,000 worth of stocks through inheritance, which led him on his trading journey. After liquidating these stocks, he began trading with the resultant funds and managed to turn them into a sizeable $250,000.
However, one hasty decision nearly cost him everything. Lipschutz though did not throw in the towel. He used the loss as a valuable learning experience and never gave up.
In 1984, soon after graduation, he joined Salomon Brothers as part of the newly formed Foreign Exchange Department, where he went on to earn an average of $300 million a year for the firm.
In 1990, Lipschutz left to pursue other ventures including the North Tower Group and Rowayton Capital Management. He is now the Director of Portfolio Management at Heathersage Capital Management, which he co-founded.
If you want to read more about other highly successful traders, check out our article on top forex books on the market, including the Market Wizards series of books.
3) Be Sure to Take Breaks
“There is a time to go long, a time to go short and a time to go fishing.”
Born in 1877, Jesse Livermore was one of the greatest traders of all time, legendary in several investment circles.
Livermore is most well-known for profiting around $100 million (equates to approximately $1.5 billion in today’s dollars) in 1929 from the Wall Street Crash, by entering huge short positions earlier in the year.
Author of How to Trade in Stocks (1940), Livermore traded on his own using his own funds, his own system, and not trading anyone else’s capital. He enjoyed trading stocks that moved in a trend and avoided ranging markets. When prices approached a pivotal point, he would wait to see how they reacted.
And now that we’ve discussed the risks of overtrading, let’s discuss the importance of taking regular breaks from trading and spending some crucial time away now and then.
Why is this so?
As we have mentioned in a previous article, our emotions can sometimes get the better of us. If you combine emotion and trading, it’s a recipe for disaster. Taking a break from trading is a great way to prevent this, especially after a string of losses.
Livermore was highly successful, however, he lost his fortune several times, usually from not following his own rules. He may have been even more successful had he paid more attention to his quote above.
Highly regarded as a must-read for all traders, Edwin Lefèvre wrote a book on Livermore’s life “Reminiscences of a Stock Operator (1923)”.
4) No Strings Attached: You x Trades
“Markets can remain irrational longer than you can remain solvent.”
To be a successful trader, you need to accept that no matter how much analysis you have done, no matter how much you think the odds are in your favour, there will be times when the markets will not behave in the way you expect them to.
During the Great Depression in the 1930s, John Maynard Keynes revolutionised economics. Keynesian Economics still provides the framework for how governments around the world respond in times of financial crises. In just a few words, Keynes’ quote reminds us of the danger of mispricing in the financial markets.
Several traders lose money simply by holding onto losing positions in hope the market will reverse in their favour. The reality is, however, you can lose your account balance long before the market agrees with you. That’s why it’s imperative to never become emotionally attached to a trade. Learn to cut your losses short.
5) Learn How to Lose
“In this business, if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.”
In the early 1980s, portfolio manager Peter Lynch became one of the world’s most famous investors after taking over the Fidelity Magellan mutual fund. The assets of the fund were $20 million.
When you start trading, one of the first things you need to accept is that losses happen. And often. Lynch’s quote explains just that. Whether you’re a veteran or beginner trader, it’s a normal thing to happen. Learn from your losses and move forward.
As Lynch says, a successful trader is not someone who wins all the time. It’s someone who can make a profit when they’re right and learn when they’re wrong.
6) Control Your Emotions
“You need to know very well when to move away, or give up the loss, and not allow the anxiety to trick you into trying again.”
And as we conclude this article, we come full circle with a final quote from Mr Warren Buffet.
Not only is it important to identify when to cut your losses short, but should you face a loss, you also need to be in control of your emotions and not let them dictate your next move.
It’s not uncommon to hedge your bets continuously, feeling like you need to regain the money you’ve just lost. However, this usually leads to irrational, emotionally led decisions, which ultimately lead to further losses.
Always go in with a clear mind, and be as rational and unemotional as possible. Your approach to the financial markets could decide which direction you go in.
We hope you’ve found our list of quotes entertaining and helpful, offering insight into dealing with the psychological aspect of trading.
Continue to develop your skills as a trader, plan and research your trades, and always go in with caution. Research goes a long way.
You can be trading in just minutes with some of the lowest fees and best trading conditions you’ll find anywhere. Choose to trade with an Low-cost broker, reputable broker.
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