Jul

11

I took the time to write below a collection of tweets by Jack Schwager (@schwager). I find there are a number of useful quotes.

"Scaling out of a position ensures at least partial profits if move continues while mitigating profitsurrender if mkt reverses"

"You don't have to get into or out of a position all at once."

"Traders who are successful over the long run adapt" [O'Shea]

"Traders who fail may have great rules that work, but then stop working." [O'Shea]

"What we call intuition is the objective synthesis of information based on past experience, unhindered by emotional distortions"

"The trick is to differentiate between what you want to happen and what you know will happen."

"Whenever you try to get all your losses back at once, you are most often doomed to fail." [Schwartz]

"Impulsive trades can be dangerous. Trades cited as their most painful by the Market Wizards were usually impulsive ones"

"The market will seldom reward the carelessness of trades born of desperation."

"The markets are an expensive place to look for excitement."

 "I don't trade for excitement; I trade to win." [Hite]

"Hollywood image of trading as adrenaline-filled and high-risk makes for good visuals but has nothing to do with successful trading"

"If I get a rush, it means that something has gone horribly wrong." [Alex Honnold]

"Most people lose in trading because their inclination to make comfortable choices leads to worse-than-random results"

"The more a trading system has been optimized to improve its past performance the less likely it is to perform well."

"If you bring normal human habits and tendencies to trading you'll gravitate toward the majority and invariably lose" [Eckhardt]

"Investors did much worse than random in selecting stocks from our prescreened list" [Greenblatt]

"The need for emotional satisfaction will lead most people to make decisions that are even worse than random." [Eckhardt]

"Position sizing should be reduced when different positions are positively correlated."

"Traders should be willing to take larger trades when they have very high conviction."

"When you have tremendous conviction on a trade you have to go for the jugular. It takes courage to be a pig."[Druckenmiller]

"It's not whether you're right or wrong that's important but how much you make when right and lose when wrong" [Druckenmiller]

"You cannot win if you are trading at a leverage size that makes you fearful of the market." [Seidler]

"One sure way of knowing your position is too large is if you wake up worrying about it." [Clark]

"Trade within your emotional capacity or you'll get out on meaningless corrections and lose on trades that would have won"[Clark]

"The larger the position the greater the danger trading decisions will be driven by fear rather than by judgment and experience."

"A greedy trader always blows up." [Kovner]

"Advice to novice traders: Undertrade, undertrade, undertrade. Whatever you think your position ought to be cut it in half." [Kovner]

"Mr. Stupid, why risk everything on one trade? Why not make your life a pursuit of happiness rather than pain?" [Jones to himself]

"The thing that saved me was when a trade met all my criteria, I would trade 5 times the position size as other trades" [Marcus]

"Just as in blackjack trading larger for higher probability trades & smaller for lower ones could shift negative edge to positive"

"Be wary of trumpeting your predictions about mkt b/c it will make you more reluctant to change your view if mkt facts change."

"Good traders liquidate their positions when they are wrong; great traders reverse their positions when they are wrong."

"If I was thinking one way & now see it was mistake then I am not only person in shock so I better be first one to sell" [Platt]

"When I am wrong, the only instinct I have is to get out." [Platt]

"Soros has the least regret of anyone I ever met. When trade is wrong he will just cut it, move on, & do something else" [O'Shea]

"When mkt moves counter to my expectations have always been able to say "hoped to make money on this but not working so getting…"

"Loyalty is a good trait – in family, friends, and pets, but not in a trader. For a trader, loyalty is a terrible trait." 

“If you don't stay with your winners, you are not going to be able to pay for the losers.” [Marcus]

"The success rate of trades is the least important performance stat and may even be inversely related to performance" [Eckhardt]

"The need to ensure that a trade will end up in the winning column leads traders to leave a lot of money on the table."

"Human nature seeks to maximize the chance of gain rather than the gain itself." [Eckhardt]

"While amateurs go broke by taking large losses, professionals go broke taking small profits." [Eckhardt]

"Men who can both be right and sit tight are uncommon." [Lefevre]

"It was never my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!" [LeFevre]

"Beware of taking dubious trades born out of patience."

"Debussy said, "Music is the space between notes." One could also say that successful trading is the space between the trades."

"There are no called strikes on Wall Street." [Warren Buffett]

"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." [Rogers]

"One of best rules anybody can learn about investing is to do nothing absolutely nothing unless there is something to do" [Rogers]

"Dangers of watching every tick are twofold: overtrading and increased chances of prematurely liquidating good positions"

 "Having a quote machine is like having a slot machine on your desk – you end up feeding it all day long." [Seykota]

"There is plain fool who does wrong thing at all times but there is Wall St fool who thinks he must trade all the time" [Lefevre]

"Trading is a matter of probabilities. Even the best trading processes will lose a significant percentage of the time."

"You can't win if you are not willing to lose."

"A losing trade that adheres to a prftbl strtgy is still a good trade b/c if similar trades repeated process will win on balance."

"Do not confuse concepts of winning and losing trades with good and bad trades. Good trade can lose money and bad trade can make…"

"To win at trading, you need to understand that losing is part of the game."

"Amateur traders lose money because they try to avoid losing. Professional traders understand they need to take losses to win."

"If you get out even, you can say, "I was not wrong. I didn't make a mistake." That need not to be wrong is exactly why people lose"…

"I was able to become a winning trader when I was able to say, "to hell with my ego, making money is more important."

"Why is getting out even so important? Because it protects the ego." [Schwartz]

"What is the ultimate rationalization of a trader in a losing position? I will get out when I am even."

"If you know you have won the game of trading before you start, then there is no problem taking a loss." [Dr. Van Tharp]

"One sure sign that you lack confidence in seeking the advice of others."

"One way to gauge whether you will be successful as a trader is whether you are confident that you will succeed."

"Confidence is one of the most consistent traits exhibited by the successful traders I have interviewed."

"If you listen to anyone else's opinion, no matter how skillful or smart a trader might be, I guarantee it is going to end badly."

"You have to follow your own light. When you try to include someone else's style you end up with worst of both sides." [Marcus]

"It is truly amazing how the market will not let traders get away with even a momentary lapse of discipline."

"As long as you are in a position, there is tremendous anxiety. Once you get out, you begin to forget about it." [McKay]

"If you stick around when the market is severely against you, sooner or later they are going to carry you out." [McKay]

"When I get hurt in the market, I get the hell out. It does not matter at all where the market is #trading." [McKay]

"Effective money management is not a matter of complexity, but rather a matter of discipline."

"By only risking 1%, I am indifferent to any individual trade." [Hite]

"It is the 80/20 rule of life. In trading, 80% of your profits come from 20% of your ideas." [Platt]

"While you are in a position you cannot think. When you get out, then you can think clearly again." [Marcus]

"When in doubt, get out and get a good night's sleep." [Marcus]

"If undecided btwn liquidating losing trade + gritting teeth + riding out remember there is 3rd alternative: partial liquidation."

"By trying to be 100% right, many #traders end up being 100% wrong."

"The need to be 100% right prevents many #traders from considering partial liquidation."

"In-the-money options may sometimes provide a more attractive risk management tool than stops."

"Place stop at level that disproves your trade premise, not your pain level. Mkt doesn't care about your pain threshold." [O'Shea]

"Placing stop too close can lead to multiple losses. Traders will want to get back in b/c they don't think they're wrong" [O'Shea]

"You have to be willing to allow enough risk for the trade to work." [O'Shea] 

"Why is deciding where you will get out before you get in so important? Because before you get in is last time you have objectivity."

"The most important trading advice if restricted to only 10 words: know where you will get out before you get it."

"Know your uncle point." [Schwartz]

"The amount of attention most beginning traders devote the money management is inversely proportional to its importance."

"You can do well with a mediocre method and good money mgmt, but go broke with a superior entry method and poor money mgmt."

"Don't focus on making money; focus on protecting what you have." [Jones]

"If your portfolio is sailing to new highs almost daily and virtually all your trades are working, watch out!"

"Winning streaks lead to complacency and complacency leads to sloppy trading."

"My biggest losses have always followed my largest profits." [Schwartz]

"If the trend in your equity is down, that is a sign to cut back and reevaluate." [Marcus]

"Traders may be aware of a losing streak but slow to realize that a loss has far exceeded acceptable levels."

"If you are in a losing streak, the best solution is not trying harder, but rather the exact opposite: stop trading."

"When you are getting beat to death, get your head out of the mixer." [Dennis]

"When I have had a bad losing streak, I have been able to say to myself, "you just can't trade anymore.[Marcus]

"In the end, losing begets losing. When you start losing, it touches off negative elements in your psychology" [Marcus]

"I will keep on reducing my trading size as long as I'm losing." [McKay]

"After a devastating loss, I always play very small and try to get black ink, black ink… And it works." [Schwartz]

"Keep reducing risk during equity drawdowns so that you will have a gentle financial and emotional touchdown." [Seykota]

"When trading poorly I keep reducing my position size. That way I will be at my smallest size when my trading is worst." [Jones]

"Generals always fight the last war; portfolio managers invest in the last bull market." [Rogers]

“The idea that #tradingsuccess is tied to finding some specific ideal approach is misguided. There is no single correct methodology"

"Were it not for their relentless persistence, many of the Market Wizards would never have discovered their
ultimate potential."

"In trading, just as in archery, whenever there is effort, force, straining, struggling, or trying, it is wrong."

"You have to learn to let the arrow shoot itself"

"If you are out of sync with the markets, trying harder is often likely to make matters even worse."

"If trading is going well, it will seem effortless. if trading is not going well, you can't force it right by working harder."

"The hard work in trading comes in the preparation. The actual process of trading, however, should be effortless."

"It is a quirk of trading that you could be successful for the short-term without knowing anything; that possibility fools people"

"The possibility of short-term trading success by pure luck beguiles people into thinking trading is a lot easier than it is."

"Trading is probably the world's only profession in which a rank amateur has a 50-50 chance of being right in the beginning."

"But the fact is that the people who are really successful in trading are tremendously hard workers. Why are so many people attracted to trading? Because it seems like an easy way to make a lot of money."

"I was amazed to find that so many of the great traders I interviewed were workaholics."

"I always want to be better prepared than someone I am competing against. I prepare myself by doing my homework each night."

"If you have an approach that makes money then money mgmt can make the difference between success and failure."

"Good money management alone is not going to increase your edge at all."

"To make money you need to have an edge and employ good money management."

"Successful #tradersare confident that their methodology provides an edge."

"So what exactly is your methodology? If you cannot answer that question, you are not ready to be risking money in the markets."

"Money mgmt cannot save you if you do not have an edge. It is helpful in preserving capital only if you do have an edge."

"If you don't have an edge then the optimal money mgmt strategy is to bet it all at once–the epitome of bad money mgmt."

"If I try to teach you what I do, you will fail because you are not me." [O'Shea]

"By living the philosophy
that my #winners are always in front of me, it was not so painful to take a loss." [Schwartz]

"Successful #traders find a methodology that fits their personality." #LBMW

"Market success is a matter of finding the methodology that is right for you, not finding the one true methodology."

"There are a million ways to make money in the markets. Unfortunately they are all very difficult to find."

"Those seeking one true answer to the mkts haven't even gotten as far as asking right question let alone getting the right answer."

"There is no single true path in the markets; no single market secret to discover; no single correct way to trade." 

"Persistence is instrumental to success. Most people faced with the early failures of some of the Market Wizards would have given up."

"Novice #traders should start with small amounts of cash because they might as well pay less for their market education."

"Failure is not predictive. Even great traders often encounter failure – and even repeated failures – early in their careers.


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