Success in trading is not a game of luck but requires years of experience. Here’s a list of tips from 10 trading masterminds from around the world.
1. Jesse Livermore
“Do not anticipate and move without market confirmation—being a little late in your trade is insurance that you are right or wrong.”
Livermore is the author of “How to Trade in Stocks.” In 1929, he was worth over $100 million, which is now billions, depending on the index you use. He is still mentioned in trading forums for making memorable trading decisions.
His mantra was to enter the market only when factors were favorable. He was a low-frequency, high returns player who emphasized to traders the importance of studying and truly understing the pulse of the market.
2. Ed Seykota
“The three crucial compenents of trading, in order of importance are: (1) the long-term trend, (2) the current chart pattern, and (3) picking a good time to buy or sell.”
Seykota converted his client account from $5,000 into $15,000,000 in the 70s. He was known for designing and standardizing a programmed trading system, emphasizing chart patterns. Seykota’s success came from an early understanding of chart patterns.
3. Richard Dennis
“The money I made in trading is because the majority is wrong a lot of the time. Markets—which are just mad crowds—are irrational. When people are emotional, they’re almost always wrong.”
Dennis was known as the “Prince of the Pit.” He turned $1600 into $200 million in a decade, and founded The Turtle Traders, a 21 member group who started off and amateurs and changed cultural idea of traders. They proved that anyone can succeed with the right training and mentors.
4. Paul Tudor Jones
“Don’t be a hero. Don’t have an ego. Always question yourself and your ability. Don’t ever think you’re very good. The second you do, you are dead.”
In 1986, Jones predicted the cataclysmic 1987 Black Monday crash of the US stock market and made $100 million as a result. While most traders lost fortunes, Tudor Jones made millions.
He is known for a matter-of-fact trading style and offering realistic advice. Rather than fight to take back profits, Jones advises walking away from a bleeding account. Sometimes, you’ve just got to cut your losses.
5. George Soros
“Markets are constantly in uncertainty and flux; money is made by discounting the obvious and betting on the unexpected.”
Soros is known as the “man, who broke the Bank of England,” with a counterintuitive trading style. He invested $10 billion on single currency trade in 1992, and his profit on the transaction reached an incredible $2 billion. Soros is a market iconoclast, not afraid to play against the odds, even when the world says otherwise. Sometimes, you’ve gotta go with your gut.
6. Jim Rogers
“Acknowledge the complexity of the world and resist the impression that you easily understand it. People are too quick to accept conventional wisdom, because it sounds true and is often reinforced by peers—many of whom never looking at whether the facts support the received wisdom.”
Jim Rogers co-founded Quantum Fund with George Soros. Rogers is known for his patience and calm decision making. His trading principles are old school and believed that the quality of trades was much more important than quantity. It is better to trade less than your competitors and wait for the one opportunity of a lifetime.
7. Stanley Druckenmiller
“Good investors are successful not because of their IQ but investing discipline. A well-researched trading machine can make average investors redundant. But can never beat investors with exceptional intuition and skill.”
George Soros hired Druckenmiller in 1988 to take charge of the Quantum Fund from Victor Niederhoffer. He also made over a billion dollars from shorting British Pound Sterling in 1992. Druckenmiller taught that there is nothing wrong with having a few losers in your portfolio. A true trader always focuses on the overall risk to reward ratio.
8. John Paulson
“You must have a strategy. Stay true to that strategy and do not pay attention to the noise that surrounds any particular investment.”
John Paulson rose to fame in 2007 when he bet against mortgage-backed securities and profited over $4 billion. When asked about his trading secrets, he kept it simple: always buy low and sell high.
9. Ray Dalio
“If you work hard and creatively, you can have just about anything you want—but that doesn’t mean everything you want. Maturity is the ability to reject good alternatives in order to pursue even better ones.”
One of 2018’s 100 world’s richest people list, Ray Dalio, tells young traders to drop the “ego sensitivity.” Trading with emotion leads to losing and terrible investment decisions.
10. Warren Buffet
“Successful Investing takes time, discipline, and patience. No matter how great the talent or effort, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.”
You cannot have a top investor list without Warren Buffet. The “Oracle of Omaha” emphasizes patience when trading, and has proven to be as generous as he is wealthy, giving $32 billion to charity (99% of his fortune).
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