ZF Capital

I think one reason why so many people try to pick tops and bottoms is that they want to prove to the world how smart they are. Think about winning rather than being a hero. Forget trying to judge trading success by how close you can come to picking major tops and bottoms, but rather by how well you can pick individual trades with merit based on favorable risk/return situations and a good percentage of winners. Go for consistency on a trade-to-trade basis, not perfect trades.

– Jack Schwager, The New Market Wizards

You can’t win without an edge, even with the world’s greatest discipline and money management skills. If you could, then it would be possible to win at roulette (over the long run) using perfect discipline and risk control. Of course, that is and impossible task because of the laws of probability. If you don’t have an edge, all that money management and discipline will do for you is guarantee that you will gradually bleed to death. Incidentally, if you don’t know what your edge is, you don’t have one.

– Jack Schwager, The New Market Wizards

Even great traders sometimes have completely wrongheaded ideas when they start. They ultimately succeed, however, because they have the flexibility to change their approach. Benjamin Franklin said, “One of the greatest tragedies of life is the murder of a beautiful theory by a gang of brutal facts.” Great traders are able to face such “tragedies” and choose reality over their preconceptions.

– Jack Schwager, Stock Market Wizards