Dieting provides an apt analogy for trading. Most people have the necessary knowledge to lose weight– that is, they know that in order to lose weight you have to exercise and cut your intake of fats. However, despite this widespread knowledge, the vast majority of people who attempt to lose weight are unsuccessful. Why? Because they lack the emotional discipline.
– Victor Sperandeo, The New Market Wizards by Jack Schwager
You will need a sound approach – one that allows you to win at trading. It’s best to try to win on the grind: Plan on taking a small profit from a small number of trades. Don’t think of yourself as a take-off artist; rather, think of yourself as marketing an idea whenever you enter a trade.
– Peter Steidlmayer, Steidlmayer on Markets
When I get hurt in the market, I get the hell out. It doesn’t matter at all where the market is trading. I just get out, because I believe that once you’re hurt in the market, your decisions are going to be far less objective than they are when you’re doing well. If you stick around when the market is severely against you, sooner or later they’re going to carry you out.
– Randy Mckay, The New Market Wizards by Jack Schwager
Most people start out with too little money, and most traders do not give themselves enough time to learn. Trading is very different from physics or mathematics, where genius reveals itself early. In science, if you’re not a star by the time you’re 25, you’ll never be one. Trading, on the contrary, is an old man’s game, and now increasingly a woman’s. Patience is a virtue and memory a great asset. If you slightly improve each year, you can grow into a brilliant trader.
– Alexander Elder, Come Into My Trading Room: A Complete Guide to Trading
Hope is a dirty word for a trader, not only in regards to procrastinating in a losing position, hoping the market will come back, but also in terms of hoping for a reaction that will allow for a better entry in a missed trade. If such trades are good, the hoped-for reaction will not materialize until it is too late. Often the only way to enter such trades is to do so as soon as a reasonable stop-loss point can be identified.
– Jack Schwager, The New Market Wizards
The successful plunger may make a great name for himself for many years, on account of his huge profits. But by far the majority make just as great names for themselves, and far more tragic ones, by later failure and disaster. No names need be mentioned but the reader is probably familiar with those great meteors of past market fame who have gone through one bankruptcy after another, and who have finally died in poverty, loneliness and despair.
Let the reader ponder this basic fact. Out of a thousand individuals who enter the market, he may read in the newspapers of two, because of their practical success. One of these will be a conservative and will be consistently successful and happy. The other will be a plunger and will very likely get later publicity because he has lost the fortune that he previously made.
– Richard Schabacker, Stock Market Profits
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